China Seen Hogging Asia Bond Fund Pie as IMF Entry to Lure Flows
- India also increasing quota for foreign buyers of its debt
- Reallocation could push up bond costs from Korea to Indonesia
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China and India opening their bond markets threatens to lure funds from the rest of Asia, pushing up regional borrowing costs.
The yuan’s likely ascent to the IMF’s reserves basket will lure $1 trillion of foreign money to Chinese debt in the coming years, Goldman Sachs Group Inc. said. Overseas investors hold around 1 percent of the $3.6 trillion of Chinese local-currency government notes, compared with 40 percent in Indonesia, 32 percent in Malaysia and 17 percent in Thailand. India, with outstanding sovereign paper equivalent to $639 billion, announced in September a plan to lift the cap on foreign ownership to 5 percent by early 2018 from 3.8 percent.