HONG KONG : Bond fund managers with strategies focused on Asian high-yield issuers have switched to cash and other non-China assets after suffering huge losses in China’s corporate bond market.
Monica Hsiao, founder and chief investment officer of Triada Capital, an Asia-focused credit long-short fund, says she has not seen this kind of challenge in an investment career spanning more than 20 years. More than two dozen Chinese property developers rated by Moody’s have defaulted since the beginning of 2021 and that has pushed the number of Asian high-yield companies rated junk to a record high.
The property sector, crucial to China's political and economic stability, has seen sharp declines in prices and sales after policymakers imposed strict curbs on borrowing by developers in mid-2020. Value Partners’ Greater China High Yield Income Fund was down 37 per cent as of the end of September. The fund's assets have fallen to $611 million from $980 million at the end of April.
Bond investors are generally sitting tight and already looking ahead to next year, said Nicholas Yap, head of Asia Flow Credit Desk Analysts at Nomura.
Source: News Formal (newsformal.com)
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