"The future just happened in global fixed income," according to Hayden Briscoe's presentation at GCC.
That's because the inclusion of China onshore fixed income into the Bloomberg Barclays global fixed income benchmark is creating a shift of capital reorientation to China and making onshore markets much more influential.
Reforms have both made onshore China fixed income markets accessible to investors through programs like the Bond Connect and allowed offshore investors to directly hedge their CNY exposure.
And investors are responding, as overseas investors have added RMB 546bn (USD 807bn) of onshore holdings between January and September 2018, a 60.4% increase on the same period in 20171.
As onshore China markets bring active managers, sovereign wealth funds, and central bankers into their orbit, Hayden estimated that USD 250bn will flow into China fixed income from the Bloomberg inclusion alone2.