Amundi's head of emerging market debt is moving to invest in onshore Chinese debt in the wake of the country's ambitious Bond Connect scheme being launched.
Speaking to Citywire Selector, Sergei Strigo said he is moving quickly to uncover opportunities create by the scheme, which will allow international access to the $9 trillion onshore debt market.
Strigo, who runs several funds at Amundi including the Amundi Funds Bond Global Emerging Local Currency, said he was also keeping a close on on a similar scheme called the China Interbank Bond Market (CIBM).
'We are going to invest in Chinese bond markets in the very near future, as we expect these Chinese bonds to be part of the main benchmarks for emerging market debt or even global fixed income benchmarks,' Citywire AA-rated Strigo said.
'We really appreciate the fact that the Chinese authorities are now relaxing the rules and regulations with regards to access for international investors. I think it makes a lot of sense and we welcome this move - whether it is done through bond connect or CIBM.'
Strigo said he had invested in China through US-denominated corporate bonds previously.
In his post, which also covers currency, Strigo said he would be mainly be looking for opportunities in Chinese government bonds through the Bond Connect format.
He added the outlook for the Chinese bond market is positive and said government reforms would prevent a Chinese debt crisis. The Chinese yuan’s current strength is also attracting investors.
‘A stable currency would be beneficial for investors to invest in the bonds. In 2015 when we had the currency weakness, this was one of the main worries that investors had in investing in Chinese bonds. Having a stable currency in China will be a positive factor for foreign investors to invest in Chinese bonds.'
Over three years to the end of June 2017 the Amundi Funds Bond Global Emerging Local Currency fund lost 8.91% in US dollar terms.
This compares to a fall of 5.72% by its Citywire-assigned benchmark, the Bloomberg Barclays EM LC Govt 10% Country Cap TR, over the same time frame.