It has argued it makes little sense in owning government bonds across the world since they have become more correlated and that it’s also exposed to a wide array of currency risk through its ballooning stock holdings.“I understand this is a strategic decision,” said Ulrich Leuchtmann, head of currency strategy at Commerzbank AG in Frankfurt. “They change the benchmark. It’s not a sign that they get increasingly bearish on EM right now.
He said that a shift of developed market central bank to “to a longer ” ultra-low interest-rate policy “should keep hunt for yields in general alive,” he said. The specific changes and an implementation plan will be prepared in consultation with the fund after parliament’s deliberation of the white paper, the ministry said.