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Bullish Price Sequence

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  • In the past few months, we have seen that the tougher regulations on the property imposed by Chinese government combined with the sharp decline in 'liquidity' have led to a surge in volatility in the HY credit market.
  • Evegrande crisis (which is a Chinese real estate developer with 300bn USD in total liabilities) continues to intensifies, increasing the contagion risk to other major developers.
  • For instance, Fantasia Holdings December 2021 bond is currently trading at 72 cents on the USD, down from nearly 100 in the end of July.
  • This chart represents Chinese property developers' debt to mature; according to ANZ Research, there are 55bn USD of property developers' debt to mature next year, followed by 44bn USD in 2023.
  • Uncertainty could continue to surge in the short to medium term as investors' concern about Chinese real estate market grows, which should lead to a rise in preference for safe asset (i.e. US Treasuries, USD).

Source: ANZ Research