Lost your money investing in China property bonds? Here’s why | FSMOne SG - Research Highlights

Lost your money investing in China property bonds? Here’s why you should continue to hold on.

While China’s property bonds have taken a beating from the mortgage boycotts, we share why investors should keep calm and remain patient for the gradual recovery.

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• In view of mortgage boycotts over the past few weeks, bonds of Chinese developers have extended their losses. Although the number of mortgage boycotts has increased rapidly, we believe that this is currently not a systemic crisis.

• Other homebuyers facing non-delivery of their homes may not have a huge incentive to join the boycott, as they risk suffering a hit to their social credit scores.

• Besides, the mortgage boycotts will threaten China’s financial and social stability. Stability is the top agenda for Chinese officials, whom we expect to act quickly to contain this crisis.

• Our base case is that the mortgage crisis will be brought under control, with government intervention acting as the key near-term catalyst for a recovery in market sentiment.

• Patience is key for investors who are currently holding on to China’s property bonds. Diversification and credit selection within the Chinese property bond market remains crucial as well.

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: Eastspring Investments - Asian High Yield Bond ASDM SGD-H / Blackrock Asian High Yield Bond A8 SGD-H / Premia China USD Property Bond ETF (HKEX:9001)