Despite non-property developer bonds being relatively more attractive than Chinese government bonds (CGBs), overall sentiment among foreign investors is likely to remain low in the second half of the year.
Fund managers are keeping an eye on how the Chinese government will rule on easing monetary policy, ending Covid lockdowns, and its relationship with Russia, while at the same time “bottom-fishing” for good deals in the world’s second-largest economy.
Experts believe it’s the right time to gradually increase MPF exposure to Chinese government and policy bank bonds, while interest rates in China are expected to stay low.
Global asset owners believe China fixed income will bring good returns in the next two years, despite tougher regulations and some high-profile companies getting into difficulties.
Experts believe the Japanese pension fund’s decision will have limited impact on global investors’ appetite for China sovereign papers, and any impact would be felt more in Japan’s public sector.
Engagement with sovereigns ensuring bond investments are environmental, social, and governance (ESG)-compliant doesn’t have to be politically sensitive - but you need to be careful.
This month, AsianInvestor is running a series of stories on the decisions driving the fixed income choices of institutional investors as 10-year US treasuries drop further below zero.