J.P. Morgan Chase & Co. will begin including Chinese government bonds in its Global Bond Index-Emerging Markets Global Diversified benchmark index in February at 1% of the index a month to reach the single-country ceiling of 10% by November 2020.
That prospect would make J.P. Morgan the second major bond index provider to add mainland bonds to its indexes, following Bloomberg Barclays, which began including Chinese government bonds to its widely tracked Bloomberg Barclays Global Aggregate Bond index in April 2019.
A research note Wednesday on the firm's 2019 index governance review said investors globally currently have more than $200 billion benchmarked to the GBI-EM Global Diversified index.
China's inclusion will expand the number of countries covered in the GBI-EM Global Diversified index to 20 from 19. The inclusion of liquid CGBs, meanwhile, will likely reduce index yields by 17 basis points while leaving index duration unchanged at 5.49 years.