China state-owned company debt defaults to riseBusiness | 26 Nov 2020 4:10 pm
BlackRock predicts huge capital flows into China and Asia in the coming year under the low-yield situation.
Income-generating assets keep shrinking, said Belinda Boa, head of active investments for Asia pacific and CIO of emerging markets, fundamental active equity.
Negative-yielding bonds are now more than US$15.5 trillion globally, BlackRock estimated.
As policymakers cut rates to lessen the virus impact on the economy, China is seen as a clear beneficiary.
The China-US nominal bond yield differential, has moved from 40 basis points two years ago to about 240 basis points, said BlackRock.
As for the recent mainland’s state-owned enterprises’ credit default, Neeraj Seth, head of BlackRock’s Asian credit team, said the default rate will increase next year, but that it will have a positive impact on the development of China's bond market.