Hong Kong Citi Fixed Income Indices announces the inclusion eligibility of Chinese onshore bonds to its emerging markets and regional government bond indices. We are also pleased to expand the World Government Bond Index family with two new indices, the World Government Bond Index – Developed Markets (WGBI-DM) and the World Government Bond Index – Extended (WGBI-Extended), that will complement the existing World Government Bond Index (WGBI), which will remain unchanged.
With the issuance by People's Bank of China of its guidelines in February 2016 on the further opening of the China Interbank Bond Market for eligible foreign institutional investors, we have been monitoring China’s eligibility for inclusion in our indices.
After an extensive review that included consultations with market participants, we have concluded that China is eligible to join three existing government bond indices – the Emerging Markets Government Bond Index (EMGBI), Asian Government Bond Index (AGBI) and the Asia Pacific Government Bond Index (APGBI). Additionally, we are introducing two new related indices – EMGBI-Capped and AGBI-Capped – that are designed to limit individual market exposure by imposing a maximum country-weight criterion. Given the size of the China market, its proportion in these indices will gradually increase to its full weight over a three-month period.
Following our periodic review, we have also determined the need for the expansion of our long-standing World Government Bond Index family to better serve our global investor base with the creation of two new indices. The WGBI-DM will exclude emerging markets based on classifications defined by the International Monetary Fund and the World Bank. The WGBI-Extended will comprise 26 markets, adding China, Korea and Israel to the WGBI constituents. The WGBI remains unchanged with 23 markets.
“We are pleased to see regulatory changes that enable market access, allowing us to reflect and provide new investment opportunities in our indices,” said Arom Pathammavong, Global Head of Citi Fixed Income Indices. He added, “We recognize the importance of appropriate market representation of our family of indices and are excited to grow our WGBI index family to suit investors’ needs.”
The effective date of market inclusion in our indices will follow our inclusion eligibility validation process and account for the time required for investors to prepare for the inclusion of the new markets. For more information, please refer to the Index Announcement at www.yieldbook.com/citi-indices.
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