Bond Market Insights - Mon, 12 Sept 2022

The week ended positively for Asia credit, and this week is starting off in the same vein. Rumours circulated on social media regarding the potential removal of curbs on purchases in most major cities and tax concessions for property transactions, while a report stated that least 24 cities are also incentivizing parents to buy property for their children. This prompted some buying of BB and B names such as Agile and KGW. Country Garden also performed well, up 3-5 pts, on news of onshore debt issuance.


New home sales have improved marginally since late August thanks to the increased support for demand, policies ensuring property delivery, and accelerated project launches.


Companies such as Country Garden and CIFI bolstered cash flow in 1H22 by reducing the land acquisition costs to sales and focusing on payment collection. Cash positions still shrank due to the moderate contraction of trade and joint-venture payables. Country Garden fell from CNY92bn to CNY77bn, CIFI from CNY15bn to CNY10bn.


Macau Gaming continued to break new ground. Wynn Macau was the star, up close to 4pts. Sands, MGM and Melco were up a couple of pts.


China SOE perps continued to be hit by offshore real money but bounced as Chinese accounts were keen to pick up paper.


The Japan new issues' stellar performance slowed on Friday but continue to be dominated by buying interest. Only Mizuho gave some ground. Korea is more two-way, with SOE’s like KOROIL trading more heavily.


Indonesian President Joko Widodo is considering joining India and China in buying Russian oil. He was forced to make the unpopular move of hiking subsidised fuel prices by 30% earlier this month. 30% was also the discount offered on Russian crude in August. Appeasing the people is not going to curry favour with G7. It would be interesting to be a fly on the wall at the Bali G20 meeting mid-November, where an invitation has also been extended to President Putin by Jokowi.


This week all eyes will be on US CPI on Tuesday, which is expected to be more balanced than in recent months, m/m at -0.1%. The market still expects a 75bps hike in September, a further 50bps in October and 25bps in December, given the recent hawkish Fedspeak.


Hong Kong and China celebrate Mid-Autumn Festival today, the market is very quiet so far