At PIMCO, we think it’s only a matter of time before global fixed income investors own more Chinese assets, particularly given the prospect of benchmark inclusion into several major global indexes and greater accessibility for the onshore Chinese bond market. In the following interview, Kimberley Stafford, Tomoya Masanao, Robert Mead and Stephen Chang discuss why we see Chinese bonds as an increasingly important element in global investment portfolios and how we are assisting our clients globally to access this opportunity.

Q: Why are investors showing increasing interest in China’s onshore bond markets?

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The Author

Kimberley Stafford

Global Head of Product Strategy

Tomoya Masanao

Head of PIMCO Japan; Co-head, Asia-Pacific Portfolio Management

Robert Mead

Head of Australia, Co-head of Asia-Pacific Portfolio Management

Stephen Chang

Portfolio Manager, Asia

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Disclosures

All investments contain risk and may lose value. Investing in the bond market is subject to risks, including market, interest rate, issuer, credit, inflation risk, and liquidity risk. The value of most bonds and bond strategies are impacted by changes in interest rates. Bonds and bond strategies with longer durations tend to be more sensitive and volatile than those with shorter durations; bond prices generally fall as interest rates rise, and the current low interest rate environment increases this risk. Current reductions in bond counterparty capacity may contribute to decreased market liquidity and increased price volatility. Bond investments may be worth more or less than the original cost when redeemed. Investing in foreign-denominated and/or -domiciled securities may involve heightened risk due to currency fluctuations, and economic and political risks, which may be enhanced in emerging markets . It is not possible to invest directly in an unmanaged index.

There is no guarantee that these investment strategies will work under all market conditions or are suitable for all investors and each investor should evaluate their ability to invest long-term, especially during periods of downturn in the market. Investors should consult their investment professional prior to making an investment decision.

This material contains the opinions of the manager and such opinions are subject to change without notice. This material has been distributed for informational purposes only. Forecasts, estimates and certain information contained herein are based upon proprietary research and should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. Information contained herein has been obtained from sources believed to be reliable, but not guaranteed. No part of this material may be reproduced in any form, or referred to in any other publication, without express written permission. PIMCO is a trademark of Allianz Asset Management of America L.P. in the United States and throughout the world. THE NEW NEUTRAL is a trademark of Pacific Investment Management Company LLC in the United States and throughout the world. ©2018, PIMCO.