China Government Bonds (CGBs) [2] currently account for 73%[3] of overseas investors’ onshore bond exposure, and on the other hand, foreign ownership stands at only about 8%[4] of the CGBs. The inclusion of CGBs into mainstream international indices brings refreshed attention to the CGBs market of over USD 2 trillion[5]. As an important step for China’s integration with global financial markets, Bloomberg announced on March 23 2018[6] its plan to add Chinese government and policy bank bonds in its flagship Bloomberg Barclays Global Aggregate Index from April 2019 pending several planned operational enhancements[7] by the People's Bank of China (PBoC) and Ministry of Finance. All member securities of the Bloomberg Barclays China Treasury 1-10 Years Index would be officially included into the Bloomberg Barclays Global Aggregate Index.
CGBs are distributed across different maturities where those with maturity less than 10 years account for 80%[8] of total outstanding CGBs. The new ETF offers a one-click solution to this segment of CGBs and provides overseas investors with a unique combination of benefits including attractive risk adjusted return, generally low correlation with major global assets and clarified tax exemption.
“It is extremely important that CICC serves international investors’ needs to invest in China government bonds,” said Lin Ning, Managing Director of CICC HK AM. “We hope this ETF becomes a ‘go-to’ product for investors to access the third largest [9] government bond market in the world.”
"As international investors find new ways to access China's market, Chinese government bonds are a compelling way of diversifying their portfolios and increasing exposure to the world's fastest growing bond market," said Norman Tweeboom, Head of Portfolio & Index Sales for Asia-Pacific at Bloomberg. "CICC is a valuable partner in enabling investors a new way to access China's market via an easily tradable ETF, underpinned by Bloomberg's market leading data and analytics."
With a 45-year tradition, the Bloomberg Barclays Indices are widely-used for fixed income investors who are seeking objective, rules-based and representative benchmarks to measure asset class risk and returns. Bloomberg Barclays Indices offer unmatched market coverage, including global fixed income, inflation-linked and swap benchmark indices.
The new ETF is the second launch in a week for CICC HK AM which provides a wide range of asset management products and services for overseas clients. On December 5 2018, CICC HK AM successfully listed the CICC CSI Select 100 ETF, an A-shares ETF, on the SEHK under the ticker number 3093 for HKD counter and 83093 for RMB counter. As a “China expert,” CICC now runs both onshore China bond and stock strategies for investors around the world.
For more information about the new ETF, please visit http://www.cicc.com/portal/business/am_hk_product/etf_cicccgb_en.xhtml.
For more information about Bloomberg Barclays indices, please visit https://www.bloombergindices.com/bloomberg-barclays-indices/.
Bloomberg terminal subscribers can access the Bloomberg Barclays Indices at IN<GO>.
Notes:
1.The Index is a total return index.
2.CGBs refers to RMB denominated and settled fixed rate bonds issued by the Ministry of Finance of the People’s Republic of China.
3.Source: Chinabond, 21st Century Business Herald as of 31/08/2018
4.Source: CICC HK AM, Chinabond as of 30/11/2018
5.Source: CICC HK AM as of 30/11/2018
6.Source:https://www.bloomberg.com/company/announcements/bloomberg-add-china-bloomberg-barclays-global-aggregate-indices/
7.Additional operational enhancements by the PBoC and Ministry of Finance including the implementation of delivery vs. payment settlement, ability to allocate block trades across portfolios, and clarification on tax collection policies are required prior to the planned inclusion date to increase investor confidence and to improve market accessibility. Should the progress on these enhancements be delayed, the inclusion of Chinese government and policy bank bonds into the Bloomberg Barclays Global Aggregate Index and other Bloomberg Barclays Indices may also be delayed. (Source: Bloomberg, 23/03/2018)
8.Source: CICC HK AM as of 30/11/2018
9.Source: CICC HK AM as of 30/11/2018
Important notice: Carefully consider the ETF’s investment objectives, risk factors, charges and expenses before investing. This and additional information can be found in the ETF’s Prospectus and Product Key Facts Statement (together, the “Offering Documents”), which may be obtained by visiting www.cicc.com. You should not make any investment decision based on the information in this press release alone. Read the Offering Documents carefully before investing. The Offering Documents should be read for further details including the risk factors. Investing involves risk, including possible loss of principal.
Nothing contained in this press release constitutes investment advice or should be relied on as such. This press release has not been reviewed by the Securities and Futures Commission of Hong Kong (SFC). SFC authorization of the ETF is not an official recommendation of the ETF.
