Opportunities are emerging in China’s beaten-up bond markets after the recent selling caused by the debt crisis at property developer Evergrande. Fund giant Fidelity is now investing money back into Chinese stocks as they believe there is a high risk-reward on offer.
According to Reuters, there has been a variety of factors that has caused more than a trillion dollars erased off China’s markets, including “concerns about Evergrande’s fate alongside regulatory clampdowns on e-commerce, gaming and paid-for education.”
“There are companies that have seen good haircuts on their debt that are not justified,” Fidelity’s global Chief Investment Officer Andrew McCaffery said recently, stating that other areas of Asia are also being affected. He described the selloffs as “indiscriminate”, which are now starting to present strong opportunities.
According to recent figures, Fidelity manages an estimated $790 billion worth of assets globally. The company’s China Special Situations portfolio manager Dale Nicholls stated that he is now investing back into equity markets, where leading tech and e-commerce companies Tencent and Alibaba have seen declines of 40% and 50% respectively, since early 2021.
“I am putting more money to work here. I think risk-reward (for Chinese stocks) is stacking up quite well,” Nicholls said.
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