News

Chinese deleveraging to hurt small builders

China_property_developersInvestors have been advised to avoid corporate bonds issued by small property developers in China in favour of bonds from larger issuers in the sector. An analyst at NN Investment Partners made the recommendation after observing that state-owned enterprises (SOEs) in China have been told to reduce their debt levels as part of a government policy to deleverage. “In June, I travelled to Hong Kong and elsewhere in China to meet corporate issuers and visit some property projects,” said Clement Chong, senior credit analyst. “The tone seemed more cautious than a year ago; deleveraging and liquidity have become more serious corporate concerns. My meeting with a number of non-property SOEs revealed that the Chinese authorities had instructed them to deleverage with the goal of reducing gearing by 2-3 percentage points by 2020.” Small property developers are likely to be hit especially hard by the shrinking availability of lending, said Chong. “In an environment of tight funding conditions, lenders would most naturally prefer larger, investment-grade issuers or SOEs with government backing. Smaller or weaker companies, often high-yield, may become part of the collateral damage.” ©2018 funds global asia

Executive Interviews

INTERVIEW: Giving peace a chance

Jan 11, 2019

As US-China tensions escalated in 2018, the leaders of the two economies met in Buenos Aires to agree a truce. Aidan Yao, senior emerging Asia economist at Axa Investment Managers, talks to Romil...

INTERVIEW: Operational challenges

Jun 09, 2018

Caroline Higgins of Northern Trust tells George Mitton about A-share inclusion, ETF Connect and why Cayman funds predominate in the region.

Roundtables

HONG KONG ROUNDTABLE: A sunny picture

Jan 11, 2019

Changes to regulation, US-Sino trade tensions and further steps by China to open its capital markets were some of the topics discussed by our panel. Chaired by Romil Patel in Hong Kong.

SINGAPORE ROUNDTABLE: Optimism versus caution

Oct 23, 2018

The impact of financial technology, developments in Asian passporting and the promise of new markets in Thailand were among the topics discussed by our panel. Chaired by George Mitton in Singapore.