Bridgewater Associates examines how China’s opening capital markets could reshape global portfolios as major indices begin incorporating Chinese assets. Bloomberg’s bond inclusion is an early catalyst, while broader equity inclusion and China’s distinct economic cycle could make its markets increasingly relevant for global diversification.
Inclusion of China in Bloomberg’s Global Aggregate Bond Index Boosts Pressure on Investors to Figure Out How They Will Deal with the Opening of Chinese Markets
Bridgewater
Greg Jensen, Paul Podolsky
Article
1 Pages
Key Takeaways
Bond Flows Could Surge: Chinese bonds were expected to reach roughly 5.5% of the Bloomberg Global Aggregate by 2021, with broader index inclusion potentially directing about $1.2 trillion into China.
Equities Could Matter More: Bridgewater estimated onshore Chinese equities could eventually represent about 17% of global market capitalization if major indices moved toward full market weight.
Economic Cycles Differ: Japan, Europe, and the US had debt exceeding 300% of GDP and growth below 5%, highlighting China’s different macroeconomic backdrop and potential diversification characteristics.
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