HK/China Equity Long-Short

Osbert Tang, CFA

Osbert Tang is an equity analyst with over 20 years of experience with focuses on China transport, infrastructure, industrials and utilities sectors. He has been based in Shanghai since 2003, accumulated nearly 20 years of on-ground knowledge on the Chinese economy and financial markets, and has a wealth of contacts with China corporates and government entities. 

Osbert has received votes from top-tier institutional investors and has been a highly-ranked transport and infrastructure analyst in the Asiamoney, Institutional Investors and Greenwich surveys. In addition to his extensive experience with international investment banks including RBS, ABN AMRO (both served as Shanghai Chief Representative), Paribas Asia Equity, Maybank Kim Eng and DBS Securities, he has been a senior analyst with Moody’s Investors Service with focus on ratings of China infrastructure and related LGFV issuers. He has also worked in the area of strategic development at Sun Hung Kai Properties Limited. 

Osbert holds a BBA from the Chinese University of Hong Kong, an MBA from the University of Texas at Austin and a MSSc in Applied Psychology from the City University of Hong Kong. He was accredited with the CFA charter in 1997, and is a member of both British Psychological Society and Hong Kong Psychological Society.

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Credit

iShares China CNY Bond UCITS ETF / Credit

iShares China CNY Bond UCITS ETF (CNYB NA)

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<p>The 2Q20 default figure of the onshore bond market is better than our expectation, pointing to a sustained resilience of credit quality that has not experienced severe impacts from COVID-19. In 2Q20, the default of non-financial credit bonds amounted to Rmb26bn, an increase of 5% YoY and 12.4% QoQ (excluding the distortion from the huge Founder Group default in 1Q20) which, in our view, is a manageable figure. The number of issuers that defaulted for the first time in 2Q20 has also dropped to 4 from 5 in 1Q20, though all of them are privately-owned enterprises.</p>
<p>By sector, the default in 2Q20 is diversified, with the top three being internet software and services (24%), conglomerate (22%) and oil &amp; gas &amp; energy (14%). Despite better-than-expected default figures in overall 1H20, we are still cautious that the worst in this round of default may yet to come. We remain concern on the retailing sector, but have become more skeptical on the exporter sector due to the weakened demand for consumer discretionary products from the developed economies which are still clouded by the pandemic.  </p>
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The 2Q20 default figure of the onshore bond market is better than our expectation, pointing to a sustained resilience of credit quality that has not experienced severe impacts from COVID-19. In 2Q20, the default of non-financial credit bonds amounted to Rmb26bn, an increase of 5% YoY and 12.4% QoQ (excluding the distortion from the huge Founder Group default in 1Q20) which, in our view, is a manageable figure. The number of issuers that defaulted for the first time in 2Q20 has also dropped to 4 from 5 in 1Q20, though all of them are privately-owned enterprises.
By sector, the default in 2Q20 is diversified, with the top three being internet software and services (24%), conglomerate (22%) and oil &amp; gas &amp; energy (14%). Despite better-than-expected default figures in overall 1H20, we are still cautious that the worst in this round of default may yet to come. We remain concern on the retailing sector, but have become more skeptical on the exporter sector due to the weakened demand for consumer discretionary products from the developed economies which are still clouded by the pandemic.  


China Onshore Credit: Bravo! 2Q20 Default Figure Better than Expected