CHINA’S inclusion in the FTSE World Government Bond Index (WGBI) may pose a competition to Malaysia’s sovereign debt market. However, the risk of capital outflow is expected to be manageable, as China’s bonds will only be added into the index through a phased inclusion over a period of 36 months from October this year.
The long phase-in period for China’s inclusion, and the removal of Malaysia from the watchlist for exclusion from WGBI, have been positive news for the Malaysian Government Securities (MGS) market.
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