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EM ASIA CREDIT: MNI EM Credit Market Wrap - Asia

EM ASIA CREDIT
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** The main stories out of the region**
Asia markets will be less active this week due to the Lunar New Year (dates below), but nevertheless we have seen some very interesting developments with regards to China. First, DeepSeek, the Chinese AI platform that looks set to shake up the entire industry with its ultra cheap, highly capable, large language model. There are several implications, from a credit standpoint, it will likely drive down the cost of AI for Tech companies, with Baidu, Alibaba and Tencent beneficiaries.

In addition, the Chinese real estate company Vanke has had a change of senior management, with both the CEO and Chairmen stepping down. They will be replaced by Xin Jie, the chairman of largest shareholder (33%, BBG) and State-owned enterprise, Shenzhen Metro. Bonds reacted positively to the implied State support. The $ VNKRLE 3 ½ 11/12/2029 is now +30pts in the last couple of weeks, trading with a cash price of 60. Today we saw some softness on the $ bonds, but marginal really (-1pt) in the recent context. In terms of peers, the $ Longfor 9/29s were +60bp tighter on the day (zsprd).

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image

** The main stories out of the region**
Asia markets will be less active this week due to the Lunar New Year (dates below), but nevertheless we have seen some very interesting developments with regards to China. First, DeepSeek, the Chinese AI platform that looks set to shake up the entire industry with its ultra cheap, highly capable, large language model. There are several implications, from a credit standpoint, it will likely drive down the cost of AI for Tech companies, with Baidu, Alibaba and Tencent beneficiaries.

In addition, the Chinese real estate company Vanke has had a change of senior management, with both the CEO and Chairmen stepping down. They will be replaced by Xin Jie, the chairman of largest shareholder (33%, BBG) and State-owned enterprise, Shenzhen Metro. Bonds reacted positively to the implied State support. The $ VNKRLE 3 ½ 11/12/2029 is now +30pts in the last couple of weeks, trading with a cash price of 60. Today we saw some softness on the $ bonds, but marginal really (-1pt) in the recent context. In terms of peers, the $ Longfor 9/29s were +60bp tighter on the day (zsprd).

Keep reading...Show less