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Goldman: $1 trillion opportunity in Chinese bonds

The Goldman Sachs booth on the floor of the New York Stock Exchange
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The Goldman Sachs booth on the floor of the New York Stock Exchange

As China's stock market collapses, Goldman Sachs sees a new investment opportunity in that country: the domestic bond market.

"We expect more channels to be introduced, with significant potential to draw in foreign investment. Should foreign participation catch up to roughly the level of, say, Japan and Australia, the equivalent of around 10 to 20 percent of GDP, that could translate into more than $1 trillion of additional global fixed income investments to be allocated to China domestic bonds in the coming years," analysts Kenneth Ho and MK Tang said in a Tuesday note.

They expect China's bond market, the third largest in the world behind the U.S. and Japan, to more than triple in value from $6.3 trillion to $21.6 trillion in the next decade.

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