China Debt Seen Jumping Tenfold as Stocks Overtake Japan by 2030

China’s corporate bond issuance will surge 10-fold by 2030 and the nation’s stock market will overtake the U.K. and Japan to become the world’s second largest, according to Credit Suisse Group AG.

Bond sales in the biggest developing country will increase to $32 trillion, while the market value of stocks will jump to $54 trillion, lagging only the U.S., the Swiss bank’s research institute said in a report yesterday. Emerging markets’ share of global equity market capitalization will increase to 39 percent by 2030 from 22 percent now, the bank said.

With the benchmark Shanghai Composite Index down 66 percent from its peak in 2007, the government has been opening up its capital markets by doubling the daily trading band of the yuan and allowing foreign investors to buy the nation’s shares through Hong Kong’s stock exchange. China’s $9 trillion economy is already the world’s second largest behind the U.S.

“The disparity between developed and emerging nations in the global capital market universe will close by 2030,” Stefano Natella, the global head of equity research at Credit Suisse in New York, said in a statement. “This should be driven by a disproportionately large contribution from emerging market equity and corporate bond supply and demand.”

China’s equity market is the world’s fifth largest with a market capitalization of $3.4 trillion, according to data compiled by Bloomberg. The U.S. is the biggest at $23.5 trillion.

Credit Suisse also predicted in the report that China will account for 60 percent of stock offerings in emerging markets by 2030, a fivefold jump. The bank’s forecast depends on the government removing restrictions on its capital account to allow more investment from foreigners.

— With assistance by Shidong Zhang

Before it's here, it's on the Bloomberg Terminal.