Citigroup Inc said on Tuesday that it will include China's onshore bonds in its emerging market and regional indexes, marking another victory in China's efforts to attract foreign investors to its bond market to counter capital outflows.
The announcement by Citi Fixed Income Indices came days after Bloomberg included China bonds in its global indexes, and these moves could prompt other index publishers to follow suit.
Citi did not give a specific date for when China bonds would be added to its indexes.
Citi said that it has been monitoring China's eligibility since February 2016, when China opened its interbank bond market to foreign participants.
"We are pleased to see regulatory changes that enable market access, allowing us to reflect and provide new investment opportunities," Arom Pathammavong, global head of Citi Fixed Income Indices, said in an e-mail statement.
China has redoubled its efforts to lure overseas investors and raise bond market inflows after relaxing rules on foreign investment.
Last week, China opened its foreign exchange derivative market to foreign investors, giving them a way to hedge foreign exchange exposure in the country's bond market.
Encouraging capital inflows is part of efforts by China to protect the yuan, which fell 6.5 percent against the dollar in 2016, and staunch a slide in its foreign exchange reserves.
Authorities in recent months announced measures that made it harder to move funds offshore.
Some market watchers have argued that the moves to tighten restrictions on outflows could dampen foreign investment in China, as companies fear they will have trouble repatriating their profits.
At the end of 2016, foreigners held about 870 billion yuan ($126 billion) of Chinese bonds, just 1.5 percent of China's 56.3 trillion yuan ($8.16 trillion) interbank bond market.
JPMorgan forecast last May that Chinese government bonds could receive at least $155 billion of investment flows should China's market opening lead to their inclusion in various global indexes.
Citi said China bonds will be included in its three government bond indexes - the Emerging Markets Government Bond Index, Asian Government Bond Index, and the Asia Pacific Government Bond Index.
