Xinhau Finance and Lehman Brothers have united to unveil the China Aggregate Index. Hua He, Lehman's head of Asia fixed income research, says this will be China's first comprehensive series of bond indices since it will include both local stock exchange bonds and inter-bank exchange bonds.
"Local stock exchanges and the inter bank exchange have created their own indices, but we're the first to provide an aggregate index that includes both," he says.
The Xinhua Lehman bond index will include treasuries, agencies and corporate bonds. To be eligible for inclusion, securities will need to be Chinese Yuan denominated fixed-rate instruments with at least one year to maturity. The index will begin publication on 15 March, although the data will be calculated as of 1 January 2004.
He says the index will attract domestic and international investors looking for an objective and comprehensive performance tool for China's bond market.
"The launch of the Xinhua Lehman Bond Index underscores Lehman Brothers' commitment to building the best and most comprehensive family of indices for our clients worldwide," says Steven Berkley, Lehman's global head of fixed income indices.
He adds; "Lehman has been structuring bond indices for over 30 years. Our bond indices are one of the most widely accepted benchmarks in the industry and are used by over 90% of US institutional investors."
By bringing its bond index expertise to China, Lehman hopes to use this as an opportunity to display its strategic commitment to China. "We continue to deepen our commitment to China by developing ground breaking products ideally suited to local needs," He continues.
For Xinhua, the new index expands its existing product suite of international standard investment tools in China.
"Bringing the very best international standards to China is the dominant strategy for our product development," say Fredy Bush, Xinhua CEO.
Currently Xinhua's services include an equity index series in partnership with FTSE, credit ratings, financial news and investor relations.
The partnership will see Xinhua contributing its local experience and knowledge to provide the day-to-day bond pricing data, with Lehman using its expertise and know how to construct the index. He concludes: "In terms of marketing, we will coordinate where it fits and makes sense, otherwise we will both continue marketing the product separately."