JPMorgan picks larger China developers

[HONG KONG] JPMorgan Asset Management and Invesco Asset Management say China's cooling property market is an opportunity to boost dollar bond holdings as the government's targeted stimulus benefits the largest developers.

Chinese real-estate companies accounted for six of the 10 best-performing Asian notes in the past three months, according to a Bank of America Merrill Lynch index. The yield on 2018 debt of China Overseas Land & Investments Ltd, the nation's largest developer by market value, dropped to 3.35 per cent last week, from a record 4.31 per cent on Feb 5, while that on similar-maturity bonds of China Vanke Co fell to 3.95 per cent, from an all-time high of 5.07 per cent on March 20.

"We will pick the winners from these trends," said Stephen Chang, head of Asian fixed income at JPMorgan Asset, which oversees US$39 billion in emerging-market debt. "Although sales and prices are falling along with margins, we have identified the larger developers are gaining market share and executing well."