The new frontier of
global bond investing

It’s time to rethink China, here’s why


Having recently lowered its barriers to entry, China’s 17-trillion-dollar bond market* has become too big for investors to ignore. As the world’s second largest economy, China is a major global player and is on a significant trajectory of growth. Yet, despite the size and growth of the market, China is currently under-owned, with foreign investor participation accounting for just over 2% of the entire bond market*. In fact, China offers emerging market like returns for developed market levels of risk.

* Source: Eurizon SLJ Capital & WIND as at 31/12/2020

Emerging markets returns with developed markets risk

Why China?

The Chinese market has recently opened-up to foreign investors, which has, in our view, been the single most important change made to global financial markets since the introduction of the Euro. Bonds are viewed as a save haven in times of market stress and in particular Chinese Bonds have fared remarkably well. This is a market that is too important for investors to ignore.

1. Attractive yields 

(Tab 1) China onshore (RMB) bonds offer an attractive yield, relative to developed markets. Occupying the space between emerging and developed markets, RMB bonds offer an alternative source of yield for income investors.

2. Robust historical returns

(Tab 2) The RMB bond market has demonstrated emerging market style returns, outperforming global bond indices and developed markets such as the UK.  

Past performance is no guarantee of future returns. Income from investments is variable and not guaranteed.

3. Safe haven

(Tab 3) The RMB bond market has behaved as a safe-haven during times of market stress. At the same time the lower volatility, relative to emerging markets, has helped improve the risk reward characteristics of emerging market indices.

4. Low correlation and
superior risk/reward

(Tab 4) Over the last 15 years, RMB bonds have outperformed emerging market debt, global bonds and UK gilts on a risk adjusted basis. 

The second largest bond market in the world

The opportunity is now

    • With over USD 17 trillion* (as at 31/01/2021), the Chinese market is the second biggest bond and equity market worldwide, and on a significant trajectory of growth.
    • Yet, China is currently under-owned, with foreign investor participation accounting for only 3% of the entire bond market.
    • China has recently been opening to foreign investors with key policies and reforms, and the recent inclusion of Chinese bonds into global indices will bring even larger inflows, forecasted to reach USD 2 trillion in 5 years.
    • However, even though China’s share in global indices is rising, the imbalance between market size and index weight will persist, making the case for an active allocation into China bond market even more compelling.

*Source: WIND & Eurizon SLJ Capital

Figures are shown in (USD)
Past performance is no guarantee of future returns
Sources: Bond Market size - BIS Q2 2020
Nominal GDP, PP Adjusted GDP and Annual Growth % - The World Bank, as of 31/12/2019

Local expertise with a global perspective

The right investment manager

Our RMB bond portfolio managers are all Chinese native, fluent in Mandarin and have studied and now live in the West. We believe this represents a double strategic advantage, not only in accessing local language information and intel, understanding the local cultural nuances and policy decisions, but also in gaining a better understanding of the global economy and the global context in which to think about China.

Macro research is at the heart of our company culture and investment process. Our top-down discretional investment approach is based on our understanding of the peculiarities of the Chinese economy and its increasing relevance in determining global economic and political trends.

Team experience: Percentage of time spend living or working in region

Sources: Eurizon SLJ Capital Ltd, as of 01/02/2021

Research led idea generation

We believe that our research-led active management approach offers the best opportunity to exploit inefficiencies inherent within emerging, currency and fixed income markets with the potential to add incremental value in a risk-aware manner.

Explore the sections below to read a sample of our insights:

View the China RMB Bond
strategy page

Contact Form

Use the form below to send us an email enquiry


    Past performance is no guarantee of future performance. The value of the investment and the resulting return are subject to fluctuations, may increase as well as decrease and, at the time of redemption, the investor may not get back the financial investment.

    This communication is intended for professional investors.
    The content in this communication has been prepared by Eurizon SLJ Capital Limited, a subsidiary of Eurizon Capital SGR S.p.A. (the "SGR"). The information provided and opinions expressed are based on sources believed to be reliable and in good faith, however, no representation or warranty, express or implied, is made by Eurizon Capital SGR S.p.A. and its subsidiaries as to the accuracy, completeness, reliability and fairness of such information. Opinions and forecasts are expressed with reference only to the date of their preparation and there can be no assurance that results, or any future events will be consistent with the opinions and forecasts contained herein.
    Nothing contained in this communication should be construed as investment research or marketing communication, nor as a recommendation or suggestion, implicit or explicit, with respect to an investment strategy involving financial instruments or issuers of financial instruments, nor as a solicitation or offer, nor as investment, legal, tax or other advice. Reference to the information contained in this communication is at the sole discretion of the reader.
    This communication is also not intended for persons in jurisdictions where the public offering of financial products or the promotion and placement of investment services and activities is not authorized or to whom it is illegal to make such an offer or promotion.
    United States: This communication is not intended for use by residents or citizens of the United States of America and U.S. Persons pursuant to Regulation S of the Securities and Exchange Commission under the U.S. Securities Act of 1933, as amended and neither this video not any copy thereof may be sent, taken into, or distributed in the United States of America or given to any U.S. Persons. (
    SGR, its subsidiaries and employees are not responsible for any damage (including indirect or accidental) arising from the fact that someone has relied on the information contained in this communication and is not responsible for any errors and/or omissions contained in such information.
    This communication and its contents may not be reproduced, redistributed, directly or indirectly, to third parties or published, in whole or in part, for any reason whatsoever, without the prior written consent of the SGR.
    For further information please refer to the legal notice.