– China’s domestic corporate debt market, with debt outstanding of $6.6 trillion, is the third-largest domestic corporate (financial and nonfinancial) debt market, trailing the nearly $9 trillion U.S. market and Europe’s $7.4 trillion (considering intra-European debt issuance as domestic funding).
– The market is split between the larger interbank market and smaller exchange markets (Shanghai and Shenzhen). Local government financing vehicles account for a sizable portion of the interbank market debt outstanding (over 60% by new issue count in 2014).
– As in many other countries, a number of market participants, like insurance companies and asset managers, engage in a buy-and-hold strategy for long-term debt in China, and banks typically match shorter-duration debt with their short-term liabilities, favoring liquidity over higher yields, as do money market funds.
– Looking ahead, China must carefully balance its need for economic growth with its need to manage the significant growth of its debt burden.
- Asia & China Equities – Outlook in 3-D: Domestic, Digitalisation, Diversification (BNP Paribas)
- Chart: Chinese Margin Debt vs Other Stock Market Crashes (Guggenheim)
- China Loses #2 Creditor Rank to Germany (Bloomberg)
- Stop Worrying About Chinese Debt? (The Asset)
- China’s Mutual Funds Industry Now the Second Biggest in Asia (The Asset)
- Understanding China’s Economic and Market Developments: Managing China’s Transition into Global Benchmarks (FTSE Russell)
- The Perfect Storm Confronting Xi Jinping (Heritage Foundation)
- Moody’s Downgrades China’s But Changes Outlook to Stable From Negative (Moody’s)
- Protests Break Out As Chinese Cities Drown Under $10 Trillion In Debt, Fail To Make Payments (Zero Hedge)
- Evergrande on Brink of Collapse: 4 Things to Know (Nikkei Asia)
- The Case for Dedicated China Exposure (Cambridge Associates)
- Five Misconceptions About China’s Stock Markets (KraneShares)
- Five Things You Need to Know About Foxconn’s Shanghai IPO (The Asset)
- The Renminbi’s Creeping Internationalisation (BNP Paribas)
- There Will be a Wave of Emerging-Market Defaults, Says the Investor Who Seized One of Argentina’s Ships (MarketWatch)