Investors urged to do 'homework' before buying into Chinese bonds

China failing on ESG metrics

Despite the recent inclusion of Chinese bonds in the FTSE World Government Bond index, experts have warned that accessibility to the market remains a challenge, while some argue investors need to be “cautious” from an ESG perspective.

According to Will McIntosh-Whyte, fund manager of the Rathbone Greenbank Multi Asset portfolios, there are a number of reasons why. On the sovereign side, for example, metrics around corruption, military spending and environmental performance, as well as democratic and civil rights need to be considered. He argued that China is failing on a number of these metrics, but particularly on corruption and "respecting… democracy and civil rights". "If you are lending to a country and it scores poorly on corruption, then it becomes very difficult to be sure where your money is going," he said...