HALISTER1: Fidelity Finds China Onshore Bonds Attractive; Adding Duration

Fidelity Finds China Onshore Bonds Attractive; Adding Duration

(Bloomberg) -- Both the short- and long-ends of China’s onshore bond curve are attractive, according to Freddy Wong, a portfolio manager at Fidelity.
  • This is because near-term liquidity tightening will probably moderate as 2H economic growth will likely slow following a very strong first half, he said
  • “Yields have reached our target to add duration,” Wong says in an emailed interview, without providing details
  • As a foreign investor, the key advantages of entering China’s onshore market include attractive valuations, a broad range of bonds, high-quality sovereign and quasi-sovereign issuers and low correlations with global markets
  • One of China’s top financial reforms is to improve the cost and allocation of capital onshore 
    • Fidelity is happy to see increasing spread dispersion across issuers and tenors, bringing greater credit differentiation; means cheapest capital will make its way to more efficient and productive sectors and companies
  • Earlier stories:
    • Schroders likes China’s sovereign bonds after recent sell-off
    • HSBC Global Asset says China leverage curbs are succeeding
To contact the reporter on this story: Lianting Tu in Hong Kong at ltu4@bloomberg.net To contact the editors responsible for this story: Neha D'silva at ndsilva1@bloomberg.net Beth Thomas

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Source: BFW (Bloomberg First Word)

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Freddy Wong (FMR LLC)

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