Investment Institute
Asset Class Views

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.
Download the insight
Download report (489.6 KB)

Related Articles

Asset Class Views

Global Factor Views: Positive on ‘Quality’ equities

  • by Jonathan White , Gregory Venizelos
  • 03 August 2022 (5 min read)
Asset Class Views

China equity: Record derating calls for revaluation

  • by Aidan Yao , William Chuang
  • 16 May 2022 (5 min read)
Asset Class Views

A word with our expert on green bonds

  • by Johann Plé
  • 10 May 2022 (5 min read)

    Disclaimer

    This website is published by AXA Investment Managers Asia (Singapore) Ltd. (Registration No. 199001714W) for general circulation and informational purposes only. It does not constitute investment research or financial analysis relating to transactions in financial instruments, nor does it constitute on the part of AXA Investment Managers or its affiliated companies an offer to buy or sell any investments, products or services, and should not be considered as solicitation or investment, legal or tax advice, a recommendation for an investment strategy or a personalized recommendation to buy or sell securities. It has been prepared without taking into account the specific personal circumstances, investment objectives, financial situation or particular needs of any particular person and may be subject to change without notice. Please consult your financial or other professional advisers before making any investment decision.

    Due to its simplification, this publication is partial and opinions, estimates and forecasts herein are subjective and subject to change without notice. There is no guarantee forecasts made will come to pass. Data, figures, declarations, analysis, predictions and other information in this publication is provided based on our state of knowledge at the time of creation of this publication. Whilst every care is taken, no representation or warranty (including liability towards third parties), express or implied, is made as to the accuracy, reliability or completeness of the information contained herein. Reliance upon information in this material is at the sole discretion of the recipient. This material does not contain sufficient information to support an investment decision.

    All investment involves risk, including the loss of capital. The value of investments and the income from them can fluctuate and investors may not get back the amount originally invested.

    Some of the Services and/or products may not be available for offer to retail investors.

    This publication has not been reviewed by the Monetary Authority of Singapore.