The Goldman Sachs logo is pictured above a trader on the floor of the New York Stock Exchange shortly after the opening bell in the Manhattan borough of New York. Goldman says now may be a good time to cut holdings of Chinese high-yield bonds after the longest winning streak in six weeks. — Reuters photo
GOLDMAN Sachs Group Inc (Goldman) says now may be a good time to cut holdings of Chinese high-yield bonds after the longest winning streak in six weeks.
“Investors should use the recent rally to reduce overweight positions,” analysts led by Hong Kong-based Kenneth Ho wrote in a note dated April 4.
“We believe that there will be more headlines noises to come out of China and expect to see further credit differentiation.”
Dollar-denominated junk bonds from the nation gained 0.95 per cent in the seven days through April 4 for the second straight weekly advance, according to Bank of America Merrill Lynch indexes.
While recent improvement in emerging-market sentiment and China’s announcement of stimulus last week fueled the rally, better-quality issuers remain Goldman’s preferred bet amid continued concern about the world’s second-biggest economy, according to the note.
China unveiled a package of measures to support the economy including railway investment and tax breaks last week, as the government seeks to bolster slowing growth.
Exports likely rose 4.9 per cent in March from a year earlier, according to the median estimate of 37 analysts surveyed by Bloomberg News before trade data this week, after the biggest drop since 2009 in February.
Manufacturing contracted a third month in March, an HSBC Holdings Plc and Markit Economics gauge showed last week.
China Petrochemical Corp, known as Sinopec Group and parent of Asia’s largest oil refiner, sold US$5 billion of bonds on April 2, the biggest dollar-denominated sale by an Asian issuer in a decade, data compiled by Bloomberg show.
China Citic Bank International Ltd meets investors from today about a possible offering of notes in the US currency, a person familiar with the matter said last week.
“We expect China issuance to increase and to catch up in the remaining quarters, especially given the improvement in market sentiment in recent weeks,” wrote Ho.
Offerings from the nation slumped to US$12.7 billion in the first three months of the year, from US$15.1 billion during the same period last year, according to Goldman data.
Sri Lanka plans to sell as much as US$500 million of notes as soon as today, a person familiar with the matter said. — Bloomberg