Recent data from Bloomberg reveals that as of early November 2024, 325 Chinese bonds are included in the Bloomberg Global Aggregate Index with a 9.7% weighting, a rise of 3.7 percentage points over the past four years. Chinese bonds, denominated in RMB, are now the third largest currency in the index, trailing only behind the USD at 45.4% and the Euro at 22.3%, yet slightly ahead of the Yen at 9.6%.
Back in November 2020, Chinese government and policy bank bonds were fully integrated into the Bloomberg Global Aggregate Index after a 20-month phased inclusion process. At that time, the weight of Chinese bonds in the index was about 6%.
The total outstanding in the Bloomberg Global Aggregate Index has increased by 23% in the past four years, while the volume of Chinese government and policy bank bonds included in the index has surged by 53%, surpassing $6 trillion in total. In terms of returns, Chinese government and policy bank bonds have delivered a 21.9% positive return in local currency over the last four years. Conversely, USD, Euro, and Yen bonds have all experienced negative returns of -6.9%, -12.0%, and -7.1% respectively.
When measured in USD terms, RMB-denominated bonds achieved an impressive 14.6% return, significantly outperforming USD (-6.9%), Euro (-17.9%), and Yen (-36.3%) bonds.
The Bloomberg Global Aggregate Index is a leading benchmark for investment-grade bonds across 27 currency markets worldwide. Bloomberg's integration of Chinese bonds marked the first by a major index provider.
