China’s 2023 outlook constrained by property woes, but fiscal stimulus resumes
Falling property investments in China drove a downgrade to growth projections, despite a rebound in exports. October’s manufacturing PMI confirmed growth uncertainty. Increased issuance may weigh on sovereign bonds in Q4. Chinese and US dollar HY credit underperformed $ IG, but China sovereigns outperformed G7.
- Macroeconomic backdrop − Resilient Chinese growth in Q3, followed by long-anticipated fiscal stimulus in Q4
- Chinese bonds − Chinese sovereign bond yields increased in shorts and longs, while decreased in mid-terms
- Chinese and Asian bonds − Asian sovereign spreads vs US dipped further, as US Treasury yields rose sharply
- Performance − Currency effects drove outperformance by Thai bonds and underperformance by Indonesian bonds
This report provides actionable insights on currency-adjusted performance, macro drivers, shifts in yields, spreads and curves across conventional government and corporate bonds, for both renminbi and dollar-denominated issues.
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