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Asia and EM Credit: HK and Singapore Investor Meetings
Sandra Chow, CFA – Co-Head of Asia-Pacific Research
Zerlina Zeng, CFA – Senior Analyst - North Asia Corporates
Regis Chatellier – Senior Analyst - EM Strategy
Luther Chai, CFA – Senior Analyst - Chinese Corporates
Jonathan Tan Jun Jie – Analyst - Asia-Pacific Corporates
EXECUTIVE SUMMARY
- Our analysts held meetings with several investors in Hong Kong and Singapore earlier this month on the sidelines of our conferences in both cities; these included a mix of investor types, such as global and local asset managers, hedge funds, insurance firms, credit trading and sales desks and private banks.
- Recurring topics of conversation included: 1) Concerns over China’s economic outlook, 2) Difficulty finding investment opportunities in Asia credit, 3) Interest in ex-Asia credit, 4) China property pessimism, 5) Duration extension and 6) ESG considerations.
1. China bears
Almost everyone we met seemed doubtful of a significant uptick in China’s economic outlook and the likelihood of the authorities introducing more dramatic stimulus measures. Ongoing stress in China’s property sector, an uncertain outlook for some local government financing vehicles (LGFVs) and rising youth unemployment were among the concerns mentioned by investors we met. That said, most investors remained sanguine about the near-term outlook for China $ credit, acknowledging the strong government support and plentiful funding for state-owned enterprises, the counter-cyclical nature of LGFVs (i.e. the government will likely strive to avoid widespread LGFV stress during times of economic uncertainty) and the already distressed prices of most China property bonds. Most investors we met said they had limited exposure to China property and were now focused on investment grade credits.
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