* Singapore-listed ETF to hold initial $676 mln in the bonds
* Launch comes as foreigners pour in to CGBs
SHANGHAI/SINGAPORE, Sept 17 (Reuters) - The largest
exchange-traded fund to invest purely in Chinese government
bonds lists in Singapore next week, the bourse and the fund
manager said on Thursday, capitalizing on surging interest in
the world's second-biggest bond market.
The first China bond ETF in Singapore, managed by CSOP Asset
Management, will launch with an initial $676 million drawn from
both institutional and retail investors, CSOP and Singapore
Exchange Ltd told a briefing.
Trading begins on Monday.
The launch comes as foreign investors stream into China's
onshore yuan bonds and as it steps up efforts to deregulate its
capital markets and promote global use of the yuan.
The ETF, which tracks the FTSE Chinese Government Bond
Index, is designed to help capture "opportunities brought by the
booming China onshore bond market and its continuous inclusion
into the world's major global indices," said Ding Chen, CEO of
CSOP Asset Management.
Chinese government bonds, which pay a yield premium over
U.S. government debt of more than 200 basis points at the
ten-year tenor, are becoming increasingly popular with
Foreigners increased their holdings of onshore yuan bonds
for a 21st consecutive month in August and hold more than $400
Global index publisher FTSE Russell will announce a decision
next week on whether to add the Chinese bonds to its global
benchmark. Morgan Stanley gave China a 60-70% chance of being
included, saying it could funnel $60 billion-$90 billion of
foreign inflows in the next few years.
COSP Asset Management is more bullish, estimating the
inclusion could bring around $150 billion of inflows,
potentially helping its new China bond ETF to grow to "at least
a few billion U.S. dollars," according to managing director
The launch of the ICBC CSOP FTSE Chinese Government Bond
Index ETF also helps develop the offshore yuan
market in Singapore and comes as the SGX competes with Hong
Kong's exchange for business.
Retail brokers in Singapore said the fund could attract
interest from customers seeking exposure to an asset class that
professional investors think holds promise.
"The new ultimate safe haven of this decade will be Chinese
government bonds," said Davis Hall, head of capital markets in
Asia at Indosuez Wealth Management.
($1 = 6.7656 Chinese yuan renminbi)
(Reporting by Samuel Shen in Shanghai and Tom Westbrook in
Singapore; Editing by Simon Cameron-Moore)