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Bond Market Insights - Wed, 14 Sept 2022

China HY’s tone remained firm on Tuesday, focused on the short- end, as opposed to the recent duration extensions from real money. The market closed stronger in spite of FOSUNI 4pt slide. Greenland recovered 3pts after Friday’s slump, KWG acquired sufficient support for its exchange offer encouraging buyers of KWGPRO 22 at the 35.00 level.

According to data from CICC prices of existing homes in China fell about 8% from the peak; sales volume and prices both declined marginally in August. They also track the weighted average room for price bargaining, which remains relatively high at 3.43%, implying continued weakness. Local governments have implemented a series of policies to support home

purchasing and to ensure delivery of housing projects which benefits solid developers such as Gemdale, Vanke and Yuexiu

Macau Gaming was strong, Wynn Macau was up another 2-3pts and Melco gapped 5pts on the long end. MGM and Sands also traded up more than 2 pts.

Perhaps the sector benefitted from the news that NPPA, the Chinese gaming regulator (National Press and Publication Administration), officially granted publishing licenses for 73 online games yesterday, including titles from NetEase and Tencent, the two largest gaming companies in China. This could signal an easing of the online gaming crackdown that started in August 2021 where regulators imposed stringent measures to curb addiction.

Today Asia Sovereigns are 1-2.5pt lower and 8-15bps wider to UST. IG is trading technically around dealer positions, some are actually tighter, while the bulk are wider by a few bps. HY and perps are under pressure.


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