Onshore China bond ETFs outpacing equities

Exchange traded funds for onshore Chinese bonds are outpacing their far more volatile counterparts in mainland equities as investors seek stability despite a mild stock rally in recent weeks, Bloomberg reported. The three existing China bond ETFs, all of which launched in the last 12 months, have provided an entry point for international investors to the world’s third-largest onshore debt market–worth US$6.5 trillion, and only 2% of which is owned by foreign investors. While August’s sudden devaluation of the yuan saw the ETFs fall by as much as 5%, they cold enjoy further tailwinds should the International Monetary Fund decide in November to include the yuan in its basket of reserve currencies.