ETFdb Logo
ETFdb Logo
  • ETF Database
  • Channels
    • Active ETF
    • Alternatives
    • Beyond Basic Beta
    • China Insights
    • Climate Insights
    • Commodities
    • Core Strategies
    • Crypto
    • Disruptive Technology
    • Dividend
    • Dual Impact
    • Emerging Markets
    • Energy Infrastructure
    • ESG
    • ETF Building Blocks
    • ETF Education
    • ETF Strategist
    • Fixed Income
    • Free Cash Flow
    • Future ETFs
    • Global Diversification
    • Gold & Silver Investing
    • Innovative ETFs
    • Institutional Income Strategies
    • Leveraged & Inverse
    • Managed Futures
    • Market Insights
    • Megatrends
    • Modern Alpha
    • Multi-Asset
    • Night Effect
    • Portfolio Strategies
    • Retirement Income
    • Richard Bernstein Advisors
    • Tax Efficient Income
    • Thematic Investing
    • Volatility Resource
  • Tools
    • ETF Screener
    • ETF Country Exposure Tool
    • ETF Sector Tracker Tool
    • ETF Database Categories
    • Head-To-Head ETF Comparison Tool
    • ETF Stock Exposure Tool
    • ETF Issuer Fund Flows
    • Indexes
    • Mutual Fund To ETF Converter
    • ETF Data for Journalists
    • ETF Nerds
  • Research
    • First Bitcoin ETF
    • ETF Education
    • Equity Investing
    • Dividend ETFs
    • Leveraged ETFs
    • Inverse ETFs
    • Index Education
    • Index Insights
    • Top ETF Sectors
    • Top ETF Issuers
    • Top ETF Industries
  • Webcasts
  • Themes
    • AI ETFs
    • Blockchain ETFs
    • See all Thematic Investing ETF themes
    • ESG Investing
    • Marijuana ETFs
  • Multimedia
    • ETF 360 Video Series
    • ETF Trends on Videos
    • ETF Trends on Podcasts
    • ETF Prime Podcast
  • Company
    • About Us
    • Swag Store
  • PRO
    • Pro Content
    • Pro Tools
    • Advanced
    • FAQ
    • Pricing
    • Free Sign Up
    • Login
  1. China Insights Channel
  2. Don’t Miss the Rally in China’s Property Bonds
China Insights Channel
Share

Don’t Miss the Rally in China’s Property Bonds

Karrie GordonDec 19, 2022
2022-12-19

China’s recent regulatory shift to provide underlying monetary support for property developers and its struggling property sector as well as the rollback of its zero-COVID policy have resulted in one of the largest rallies in recent history for China’s property bonds and high-yield bonds market, reported WSJ.

High-yield bonds in Asia gained 18% in total returns in November, the best month for the property bond market in Asia in a decade, prompted by the recent regulations designed to support real-estate developers and the gradual rollback of China’s almost three-year-long zero-COVID policy.

Don’t Miss the Rally in China’s Property Bonds
Image source: WSJ

As of the end of October, a $1 billion bond that matured in January 2024 from Country Garden Holdings Ltd, a Chinese property developer based in Guangdong and one of the largest apartment sellers in China, was bidding at $0.14, in the typical default range for bonds. That same bond bid at $0.74 this month, reflecting growing investor optimism in the space.

In mid-November financial regulators in China released 16 measures aimed at providing underlying support for real estate developers and the property market for both public and private developers.

Many investors have sidestepped the Asian bond market specifically as well as emerging market bonds because of their exposure to China in the last year. For investors that started the year with high-yield bonds in Asia, those investments are still down cumulatively for the year, but the recent recovery and the recovery trajectory looking ahead could mean strong opportunity.


Content continues below advertisement

Don’t Miss the Rally in China’s Property Bonds
Image source: WSJ

“We have been pounding the table on this trade for months. Pain trade is higher as no buyers. None” tweeted Brendan Ahern, CIO of KraneShares. “China’s policy changes on COVID-19 and the property sector have sparked a big junk-debt rally.”

Investing in Asian High-Yield Bonds With KHYB

The KraneShares Asia Pacific High Yield Bond ETF (KHYB C+) is an actively managed fund that invests in USD-denominated high-yield debt securities from companies in Asia, excluding Japan. The fund is poised to capture the recovery and growth of the Asian bond market.

KHYB is benchmarked to the JP Morgan Asia Credit Index (JACI) Non-Investment Grade Corporate Index and invests in high yield fixed income securities, or “junk bonds,” that are rated below the four highest categories (Ba1/BB+ or lower) by at least one credit rating agency, or, if unrated, are determined by the sub-advisor to be of similar quality.

Nikko, the sub-advisor, uses top-down macro research and bottom-up credit research to create the portfolio, as well as a proprietary process that is a combination of qualitative and quantitative factors used to value an issuer’s credit profile.

By moving the credit curve up, KHYB will be more defensive against the benchmark and have shorter duration bonds than the index. When the bonds mature, Nikko can decide how and when it wants to redeploy and invest in new bonds, depending on market conditions.

KHYB carries an expense ratio of 0.68%.

For more news, information, and analysis, visit the China Insights Channel.

Loading Articles...
Help & Info
  • Contact Us
Tools
  • ETF Screener
  • ETF Analyzer
  • Mutual Fund to ETF Converter
  • Head-To-Head ETF Comparison
  • ETF Country Exposure Tool
  • ETF Stock Exposure Tool
  • ETF Performance Visualizer
  • ETF Database Model Portfolios
  • ETF Database Realtime Ratings
  • ETF Database Pro
More Tools
  • ETF Launch Center
  • Financial Advisor & RIA Center
  • ETF Database RSS Feed
Explore ETFs
  • ETF News
  • ETF Picks of the Month
  • ETF Category Reports
  • Premium Articles
  • Alphabetical Listing of ETFs
  • Best ETFs
  • Browse ETFs by ETF Database Category
  • Browse ETFs by Index
  • Browse ETFs by Issuer
  • Compare ETFs
Legal
  • Terms of Use and Privacy Policy
  • © 2023 VettaFi LLC. All rights reserved.
Follow ETF Database
Follow ETF Database

Advertisement

Is Your Portfolio Positioned With Enough Global Exposure?

ETF Education Channel

How to Allocate Commodities in Portfolios

Tom LydonApr 26, 2022
2022-04-26

A long-running debate in asset allocation circles is how much of a portfolio an investor should...

Core Strategies Channel

Why ETFs Experience Limit Up/Down Protections

Karrie GordonMay 13, 2022
2022-05-13

In a digital age where information moves in milliseconds and millions of participants can transact...

}
X