September 27, 2021
(Reuters) – The sharp decline in China Evergrande Group stocks and bonds has raised the specter of losses for global asset managers with exposure to the embattled real estate developer.
The charts below show asset managers’ exposure to Chinese company stocks and bonds and how they have performed.
As for equities, various Vanguard funds held a total of approximately $ 40 million worth of shares in August, according to data from Refinitiv Eikon, while BlackRock held at least $ 13 million through its MSCI iShare emerging markets ETFs.
Chart: Funds with the largest holding in China Evergrande Group: https://fingfx.thomsonreuters.com/gfx/mkt/byprjlxlkpe/Funds%20with%20biggest%20shareholding%20in%20China%20Evergrande%20Group.jpg
Evergrande’s bondholders also include some of the largest wealth managers in the world, according to the latest data released by Morningstar Direct on holdings of US and cross-border funds, as well as Asian bond funds.
The debt is held by funds managed by asset managers such as UBS, Fidelity, PIMCO and Ashmore Group, an asset manager focused on emerging markets, the data showed.
Chart: Asian Debt Fund Holdings in Chinese Evergrande Bonds: https://fingfx.thomsonreuters.com/gfx/mkt/movankdnopa/Funds%20with%20biggest%20exposure%20to%20China%20Evergrande%20Grpup’s%20bonds.jpg
Chart: Evergrande Securities Held by EM Debt Funds: https://fingfx.thomsonreuters.com/gfx/mkt/zjpqkjdxgpx/EM%20debt%20funds’%20holdings%20of%20Evergrande%20bonds.jpg
Some of the funds had increased Evergrande’s exposure in July and August, although the distress increased over its financial situation, Morningstar found.
Evergrande’s stock recovered some recent losses after the company announced Wednesday that it reached an agreement to settle interest payments on a domestic bond. He reassured retail investors on Thursday that they were a top priority.
Equities ended the day up more than 8% on Monday. However, the stock tumbled 83% this year, the fourth largest decline among Asian large and mid-sized companies, according to Refinitiv data.
Chart: China Evergrande Group stock performance this year: https://fingfx.thomsonreuters.com/gfx/mkt/byprjlxkkpe/Performance%20of%20China%20Evergrande%20Group’s%20shares%20this%20year.jpg
Evergrande missed a $ 83.5 million coupon payment deadline on a dollar bond last week and its silence on the matter has left global investors wondering if they will have to swallow big losses at the end of a grace period. 30 days.
The yield on the bond maturing in March 2022 reached an all-time high of 636% on Wednesday, up from 13.7% at the beginning of the year. It was trading 570% on Monday.
Chart: Change in China Evergrande Group bond yields this year: https://fingfx.thomsonreuters.com/gfx/mkt/akvezqnjzpr/Change%20in%20China%20Evergrande%20Group’s%20bond%20yields%20this%20year.jpg
(Reporting by Gaurav Dogra and Patturaja Murugaboopathy in Bengaluru; Editing by Nick Zieminski)
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