The most influential global bond index is believed to be the Citibank World Government Bond Index (Citi WGBI}, which is used as the benchmark for more than $2tn of AUM. The most influential EM bond index is the JPM Government Bond Index — Emerging markets Global/Diversified (JPM GBI-EM Global/Diversified), which is used as the benchmark for about $200bn AUM and caps each country’s share to 10%. A caveat, however, is that the actual size of indexed money or ETFs should be smaller. The most crucial country criteria of Citi WGBI is “fully accessible to foreign investors,” which makes China less likely to be included by far given its accessibility to only medium- and long-term investors. Even if China is being considered, the assessment usually takes a long time. So we believe the case for China to be included into Citi WGBI in 2017 is unlikely. By contrast, JPM GBI-EM Global/Diversified only requires accessibility to the majority of foreign investors and does not factor in tax hurdles in eligibility. We believe China has better chance to be included into the JPM GBI-EM Global/Diversified index. While the exact timing is hard to predict, an optimistic scenario possibly leaves 2H17 on the table. Usually when a big country is being included, bonds are introduced slowly over many months to enable clients to rotate without too much disruption. We would expect China’s inclusion to account for 10% of the JPM GBI-EM Global Diversified index. Turkey, Malaysia, S. Africa, and Thailand would lose the largest shares in the index, while the shares of Brazil, Mexico, Poland and Indonesia are expected to remain given their large absolute size. Inflows to China could be around $20bn, or equivalent to 1.5% of the aggregate central government bond market cap. Turkey, Malaysia, S. Africa, Thailand and Columbia could see outflows of $2.4bn-3.3bn each, with the most expected impact on Thailand given its lower relative foreign ownership. We would expect China to account for 4.4% of the Citi