Weightlifting China - how big will it get?
On 29 January 2019, Bloomberg announced that it would start adding local Chinese bonds to its flagship Global Aggregate index from April this year.
They are projected to become the fourth largest component of the index by November 2020. MSCI is also consulting about a potential increase to local Chinese equity exposure in its equity indices. Local Chinese equities and bonds, so long woefully underrepresented in most investors’ portfolios, are coming to the mainstream.
Significant investor inflows are likely to follow – we project $200 billion into both local equity and bond markets in our half-way house scenario and $400 billion into each if they go further.
However, in a market like China, it makes no sense to follow benchmark weights slavishly. The opportunity is alive today for investors who want to purse it.
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