China property: Unstable foundations
While sentiment is improving, this might not be the time to invest in China-related high-yield developers
EQUITY prices of China's battered property developers have rallied strongly - up an extraordinary 31 per cent since Mar 15 - on the back of surprise statements from regulators at last week's 2022 National People's Congress that the structural crisis besetting the housing sector was set to ease, and operating conditions stabilise.
How seriously should we take this rally? Should fixed income investors - particularly investors in China's high-yield (HY) property developers - interpret the improving news flow as a signal to buy? China HY is now offering yields in excess of 30 per cent - and yields on China property names are even higher.
So might this be the time to invest in a basket of China-related HY names? We suggest not.
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