Derivatives

Clearing the China bond hedging hurdle

Underdeveloped derivatives markets in China may be holding back investor access to onshore bonds. Three specialists say what needs to be done.

With overseas holdings estimated to account for around 4% of the $13 trillion Chinese onshore bond market, it is hard to resist the idea that there is a potential tsunami of investment capital beyond China's shores waiting to make landfall.

Pressure is certainly building. For all the froth, the fact remains global index providers are pressing ahead with plans to include Chinese onshore bonds in their benchmarks, in spite of the US trade tensions gnawing away at Chinese growth and business prospects.

The latest of these moves is by JP Morgan’s Government Bond Index Emerging Markets GBI-EM series of indices. ...

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