Foreign demand for Chinese bonds is surging in expectation that these securities will be admitted to international bond indices, said Andre de Silva, head of global emerging-market interest-rate research at HSBC.

By mid-October, foreign purchases of government and policy-bank bonds had brought the total for 2016 to Rmb174 billion ($26 billion), versus only Rmb35 billion for all of 2015, according to the bank. Foreigners bought Rmb78 billion in September alone.

The five-fold increase came after China partly opened its interbank bond market to foreign institutional investors in February and relaxed foreign-exchange repatriation rules in May.

More foreign participants are lining up to participate in the Chinese interbank bond market (CIBM), with at least 30 institutions now registered, according to the State Administration of Foreign Exchange (Safe). European and US asset managers are generally bullish about Chinese bonds, said Barnaby Nelson, head of investors and intermediaries for Northeast Asia at Standard Chartered, one of the CIBM settlement agents.

Meanwhile, there have been “very positive inquiries” from European institutional investors since the announcement of the new rules, said David Li, Hong Kong chief executive of Caceis, the asset-servicing arm of French bank Credit Agricole.

An executive at another settlement agent told AsianInvestor that his bank had a big pipeline of applications, largely of asset managers, comprising roughly 40% from Europe, 40% from the US and 20% from Asia.

However, Asian investors may be more cautious because they already have mainland debt exposure and are not currently looking to increase it much, said Nelson.

Alex Liu, chief investment officer of Taiwan Life, which has NT$1.1 trillion ($35 billion) in AUM, told AsianInvestor that given the depreciation of the renminbi, the insurer has taken profits on some mainland bonds in the second quarter and bought more mainland equities.

De Silva said Chinese bonds might be included in emerging-market bond indices globally by 2017. HSBC recommends investors go long 20-year government bonds. Beijing’s relaxation of remittances from CIBM removed a hurdle to inclusion in international indices, and should allow China to be more accurately represented in benchmarks such as Markit iBoxx Asia Local Bond Index, where China’s weighting is only 8.6%.

Invesco has said it expects index inclusion could drive $200 billion to $400 billion in flows from global fund managers, as reported; HSBC’s own estimate is a more modest, but still big, $100 billion to $150 billion.