The latest Chinese market to buckle under pressure from Beijing’s wide-ranging corporate crackdown: junk bonds.
Companies from China make up the bulk of Asia’s roughly $300 billion high-yield dollar bond market, thanks to a surge in borrowing by the country’s heavily indebted property developers.
But the investor optimism that drove that borrowing has collapsed.
The widening regulatory crackdown that sparked a big selloff last month in the shares of internet-technology and education companies has also weighed on Chinese credit markets, pushing down prices of even investment-grade bonds.
The moves show China is getting more serious about reining in companies whose business practices are seen at odds with national priorities. Investors are now actively looking for sectors that might be next in the crosshairs.
Author(s): Serena Ng
Publication Date: 15 August 2021
Publication Site: Wall Street Journal