China moves to make bond market more global

Citigroup said it will include onshore Chinese debt in some of its gauges, while the central bank pledged to create a “more convenient and friendly environment” for foreign investors. This follows a recent measure to allow currency hedging for bonds, a move seen as one of many efforts needed to lower barriers, according to Bloomberg. The world’s third-largest debt market needs the money, with investors still smarting from the biggest slump in six years in January. Foreign ownership of Chinese onshore bonds fell to 1.3% last year even as outstanding notes surged 32% to 64 trillion yuan ($9.3 trillion), according to a Deutsche Bank AG report last month. Inflows would help stabilize the yuan, and buttress the nation’s dwindling foreign-exchange reserves. The move to allow overseas investors access to China’s foreign exchange derivatives market was bolder than expected and may result in strong capital inflows.