• Global bond indexes are all now including Chinese bonds for the first time.
  • That's significant because there has never been a bond market as large as China's that hasn't been included in the major global benchmarks.
  • So this index inclusion process will bring global capital into China's market. Passive and active strategies will have to allocate to Chinese bonds, as well as larger players like global central banks and sovereign wealth funds.
  • This global flow will affect global markets. That's because investors globally will have to reengineer their portfolios to account for China's rise.

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