Chinese government bonds can play an important role in portfolio diversification as they are likely to continue behaving differently from other countries' debt.
China's yields have edged down in recent months even as benchmarks in the U.S., Japan, and the U.K. surged to multi-decade highs. This reflects how the world's second-largest economy remains insulated from global capital markets.
"We see room for China bonds to outperform developed-market peers on a risk-adjusted basis, with supportive macro policies and strong export growth to help support demand for central government bonds," said Norbert Ling, head of fixed income portfolio management for Asia Pacific at Invesco.
China has been dealing with a severe property-market downturn and deflation, which has kept the People's Bank of China accommodative. Chinese government bonds offer "valuable diversification benefits within a strategic multi-asset portfolio" for global and Asian investors, Wu added.
