The fund hopes to take advantage of renewed foreign interest in China government bonds (CGBs).
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The fund hopes to take advantage of renewed foreign interest in China government bonds (CGBs).
US exceptionalism is coming to an end, so global investors must find new stable stores of value, according to Indosuez’s Asia head of capital markets.
The benchmark-agnostic product can invest in onshore and offshore China fixed income securities to generate high income, according to the fund managers.
Investors are likely to differentiate further between high and low quality China property bonds following the recent restrictions on offshore issuance.
In yet another feeder fund partnership, RHB Group Asset Management’s fund will feed into Blackrock’s China bond product.
China’s onshore corporate bonds are expected to have more defaults, according to BNPP AM, but offshore China high yield is a different story.
The number of Chinese corporate defaults by issuer count and principal amount is likely to hit new highs this year, according to a recent Fitch report.
The China bond inclusion will bring in investors, though most will aim for low or close to zero credit risk bonds, according to Edmund Goh, Asian fixed income manager at Aberdeen Standard Investments.
Record defaults last year have reduced investor demand for onshore Chinese bonds, according to Moody’s, yet funds prepare for inflows following the index inclusion.
China corporate bonds offer heady yields and the default rate last year was only 1%, but very high turnover is involved in Neuberger Berman’s China bond strategy.
Part of the Mark Allen Group.