Chinese Financial Move

China has opened itself for trade a long time back. But its financial market remained closed for outsiders. In its recent 5 Year Plan (2021-25), China has shifted its focus towards financial inclusion in the global market.

During FY16-20, China did make a few changes for two-way communication in its financial market. But most of the progress was slow and half-hearted. Bond Connect Platform was created with low adoption. But things have changed.

Soon, Chinese bonds will be included in FTSE Russell World Government Bond Index. These moves are towards strengthening global financial inclusion in the Chinese bond market.

Effect on the Global Market

There will be a shift in investment from European and Japanese government bonds to Chinese government bonds. As the yields are higher. Investors will get better returns.

The US will face strong Overseas Investment competition. Mostly it will lose in long run.

Effect on the Indian Market

The effect will not be significant for the next 3-5 years. But it will an interesting development to observe in the backdrop.

I think in 10 years, traders will be more excited about Chinese Futures in comparison to Dow Jones Future. It is a far-fetched imagination but can turn out to be true.