Highlights from our China capital markets webcast
Despite volatility in credit spreads in the property sector, overall there has been credit tightening. Appreciation in the Renminbi (RMB) has also benefitted foreign investors.
“The real estate situation has shown that defaults by large companies can happen in China, which is a positive sign as it suggests there will be greater credit differentiation going forward,” explained Steverink.
But on the flip side, Steverink emphasized, “One of the things that’s important now for investors in the Chinese bond market is to focus on credit risk. It’s becoming more and more important. And not only for smaller companies, also big companies. Investors have to be aware that the government may not cover all institutions anymore.”
Although China has taken significant steps over the years to ease access for foreign investors (see figure 3), certain challenges remain for global investors looking to access the onshore market. For example, different public holidays in Hong Kong and China stock markets make trading impossible for investors via Stock Connect on a China public holiday, a Hong Kong public holiday as well as the day prior to the Hong Kong public holiday. This increases risk exposure due to potential price fluctuations and funding cost.
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