China green bonds: Too big and attractive to ignore
- 13 April 2022 (7 min read)
Key Points
- The ambition to decarbonise the world’s largest greenhouse gas emitter has fuelled tremendous growth in China’s burgeoning green bond market. As the world’s second largest supplier of these bonds, China offers several attractions to global ESG-focused investors.
- First, as a platform for financing a key national development objective, the green bond market will likely continue to receive strong policy support. It could serve as a haven for investors who have been through a hard time investing in China due to regulatory uncertainties.
- Second, global demand for green assets has grown strongly. While China is a latecomer to ESG investing, the theme has caught on fast with local investors reflected by the boom in ESG-focused funds in recent years
- Third, China’s size is striking when it is seen in the Emerging Market (EM) context. With a 90% market share in local currency bonds, China cannot be overlooked by any investors who seek to earn an extra yield on their green investments.
- Finally, China green bonds are attractive from both green and financial perspectives. The former is due to a closer alignment between local and international green bond standards. As for the latter, China bonds are generally higher yielding, shorter in duration and have delivered competitive performance on a gross and risk-adjusted basis in recent years.
Disclaimer
The information on this website is intended for investors domiciled in Switzerland.
AXA Investment Managers Switzerland Ltd (AXA IM) is not liable for unauthorised use of the website.
This website is for advertising and informational purpose only. The published information and expression of opinions are provided for personal use only. The information, data, figures, opinions, statements, analyses, forecasts, simulations, concepts and other data provided by AXA IM in this document are based on our knowledge and experience at the time of preparation and are subject to change without notice.
AXA IM excludes any warranty (explicit or implicit) for the accuracy, completeness and up-to-dateness of the published information and expressions of opinion. In particular, AXA IM is not obliged to remove information that is no longer up to date or to expressly mark it a such. To the extent that the data contained in this document originates from third parties, AXA IM is not responsible for the accuracy, completeness, up-to-dateness and appropriateness of such data, even if only such data is used that is deemed to be reliable.
The information on the website of AXA IM does not constitute a decision aid for economic, legal, tax or other advisory questions, nor may investment or other decisions be made solely on the basis of this information. Before any investment decision is made, detailed advice should be obtained that is geared to the client's situation.
Past performance or returns are neither a guarantee nor an indicator of the future performance or investment returns. The value and return on an investment is not guaranteed. It can rise and fall and investors may even incur a total loss.
AXA Investment Managers Switzerland Ltd.