The debt default of individual housing enterprises has brought a certain impact on the market, and it is expected that it will take a while to digest
Text | "Finance" reporter Huang Huiling
Edit | Lu Ling
Since it involves investments in overseas markets, the net value update of QDII funds is always a beat slower than that of funds investing in China. On the evening of October 11, the QDII fund released data on October 8, recording the fluctuation of the net value invested in overseas assets during the National Day. Surprisingly, as many as 27 QDII funds led the market (different shares are calculated separately), with a minimum decline of nearly 4% and a maximum decline of more than 17%, and most of them are bond funds.
Bond funds are also commonly known as "fixed income funds", and the risk level is between equity funds and monetary funds. Why is there such a big decline this time?
The QDII debt base is collectively green
The following table shows the updated net worth data on the evening of October 11. From a market-wide perspective, the products that have fallen the most are all QDII funds:
As can be seen from the above table, the types of funds with larger declines are mainly QDII bonds. Among them, the biggest decliners are Penghua Global High Yield Bonds (000290) and Penghua Global Short-term And Medium-term Bond Fund (206006), with daily growth rates of -17.63% and -17.57% respectively. In addition, funds such as Cathay Pacific Overseas High Yield (000103), Huaan Hong Kong Select (040018), GF Asia Pacific Medium and High Yield (000274), Huaan GreatEr China Upgrade (0400221), and Dacheng Global Dollar Bonds (008751) also fell by more than 5%.
In the face of changes in net worth, the Penghua Fund, which fell the most, was the first to give an explanation. On the morning of October 12, on the forum of the Daily Fund Network, the official account of Penghua Fund released the "Penghua Global High Yield Bond Change Review", but the review was quickly withdrawn.
The comment mentioned that "affected by the default of Fantasia bonds, chinese dollar bonds have generally declined recently, especially in high-yield bonds such as B-rated bonds, and the proportion of global high-yield bonds invested in high-yield bonds is not less than 80% of the assets of non-cash funds, and the net value fluctuates due to this." The increase in the net value of the products announced on October 11 reflects the change in the valuation of the fund's assets between September 30 (excluding the day) and October 8 (inclusive), and the high-yield US dollar bonds listed in Hong Kong are still trading normally during the domestic market break from October 4 to October 7, not the net value performance of a single trading day. According to the content of the fund's second quarterly report, there was no disclosure of investment fantasia bonds. ”
What important messages were conveyed in the penghua fund's review? The "Finance" reporter combed as follows:
1. Although the net value of the fund shows the net value of the single day on October 8, it actually reflects the change in asset valuation throughout the National Day period, during which the US dollar bonds listed in Hong Kong are still traded normally.
2. The Fund's investment theme is high-yield bonds, and the recent general decline in Chinese dollar bonds, especially high-yield bonds, has affected the net value of the Fund.
The decline in Chinese dollar bonds was mainly due to the impact of the default of Fantasia bonds. The fund's public disclosure part did not see the fund invest in Fantasia bonds.
The Fund's definition of a high-yield bond includes: "a bond that does not meet the S&P rating BBB-rated, or the bond that does not meet moody's rating Baa3, or the bond that does not meet the Fitch rating BBB-rating, or the bond that is not rated by a credit rating agency." "High-yield debt, in layman's terms, is also called "garbage debt." Judging from the credit rating of the individual bonds held by the Penghua High Yield Bond Fund, the proportion of unrated bonds accounts for more than half.
In the Penghua Global Short-term and Medium-term Bond Fund, the investment goal is: "By analyzing the macroeconomic conditions of various countries and regions around the world and the micro-fundamentals of each bond issuer, under the premise of prudent investment, with short- and medium-term bonds as the main investment target, and strive to obtain investment returns higher than the performance benchmark." ”
The fund's investment target is "short- and medium-term bonds", i.e. bond assets with a remaining maturity of not more than three years. Among them, the strategy of credit bonds is "mainly through the purchase and holding of credit bond products with bearable credit risks and relatively reasonable maturity and yield, to obtain coupon income", and the specific credit rating is not clearly stated. The following is the credit status of the bonds held by the Zhongpenghua Global Short-term Bond Fund in the semi-annual report:
Although Penghua Fund explained through Internet channels, investors still have many questions: How exactly are the positions of Penghua Global High Yield Bonds affected? In addition, The Penghua Global Short-term and Medium-term Bond Fund is not the subject of investment in high-yield bonds, so why is there an equal decline?
Most of the top five heavy debts come from the real estate industry
The sector most affected by fantasia bond defaults is the Chinese real estate US dollar bonds, and the main reason for the large decline in penghua fund-related products may be due to the high degree of heavy position in this sector. In addition, some insiders said that the proportion of institutional investors in the two funds is relatively high, and the negative impact of large amounts of institutional investors on the fund cannot be ignored.
CICC fixed income research team on October 11 article analysis said that last week, The Chinese dollar bond fell significantly under the influence of the Fantasia default event, and the high-yield real estate bond fell by 13.6% in a single week, falling more than the 2020 dollar liquidity crisis, and it is difficult for investment-grade entities to stop the decline, and there is no shortage of long-term bonds falling below $90.
What is the heavy position of Penghua Fund in the US dollar debt of Chinese real estate? Since public funds have fewer disclosure requirements for bond funds (do not disclose the proportion of industry positions, do not disclose all positions, top ten heavy positions, etc.), the public information can only consult the details of the top five bond heavy positions.
From the latest semi-annual report disclosed by the relevant fund, it can be seen that the top five heavy bonds account for about 15% of the net value of the fund, and the individual bond positions are relatively dispersed, and the proportion of single bond positions is about 3%, but the industry concentration is very high.
Among the top five heavy-duty bonds in the world, four of the top bonds are real estate-related, accounting for 81%. The top five bonds of Penghua Global Short-term and Medium-term Bonds are all real estate-related. The companies involved include Kaisa, Yuzhou Group, Sunac China, Rongxin China, Landsea Green Real Estate, etc.
(Penghua Global High Yield Bond Fund Semi-annual Report Top Five Positions Details)
(Penghua Global Short-term and Medium-term Bond Fund Semi-annual Report Top Five Position Details)
Earlier, Evergrande was also a heavy bond of fund manager You Bainian. At the end of last year, the largest heavy bond of Penghua Global High Yield Bond Fund was CHINA EVERGRANDE GROUP, that is, China Evergrande, accounting for 3.85% of the net value of the fund. In the middle of last year, Penghua Global Short-term and Medium-term Bond Fund also heavily invested in China Evergrande-related bonds, accounting for 4.22%.
Judging from the trend of the net value of the fund, the decline of the two funds has lasted for a long time. Penghua Global High Yield Bond Fund fell by 14.71% during the third quarter, and has fallen by 31.58% this year. Penghua Global Short-term and Medium-term Bond Fund fell by 16.11% during the third quarter, and has fallen by 33.28% this year.
The fund manager concluded in the interim report that since the end of May, a number of negative events of benchmark housing enterprises have caused heavy damage to high-yield sectors, especially the real estate sector, and the prices of housing enterprises have been sharply adjusted, second only to March 2020. In just one month in June, the high-yield sector fell by about 2.5%, not only erasing the gains in April and May, but also making the return in the first half of this year negative.
Previously, the fund manager looked forward to the second half of the year, "At this time, the layout of high-yield bonds, in addition to high coupon yields, also superimposed a part of the capital profit space, making Chinese high-yield dollar bonds a very cost-effective investment variety." In May and June, the fund was affected by the overall decline in the real estate sector, and the net value retraced, but at the same time, the static yield of the bonds held was higher, and the average remaining maturity was shorter. As the maturity of the bonds in the open position continues to approach, the bond price will quickly repair, providing important flexibility for the future repair of the net value of the fund. ”
But the market's expectations for the real estate sector are not optimistic.
On July 26, China Chengxin issued an announcement that based on the fact that the real estate industry continues to be in a relatively strict regulatory environment, and based on the weakening of the low base effect in the first half of 2020 and the continuous impact of regulatory policies, it is expected that the growth rate of commercial housing sales will slow down in the second half of 2021, resulting in an increase in the refinancing pressure of real estate enterprises, of which the possibility of cash flow tightness will increase for housing enterprises with greater debt concentration and maturity pressure, and the outlook of China's real estate industry will be adjusted from stable to negative.
In the August report, the CICC Fixed Income Research Team analyzed that the default of bond issuers in the real estate industry is spreading from single-regional, single-property and small-scale housing enterprises in the early stage to large-scale and ordinary residential development enterprises, the regulatory policies are tightened in an all-round way, the market risk appetite is further reduced, and the pressure on the disposal of enterprise projects to return funds is rising, which aggravates the risk exposure of the industry. The overall rise in credit risk in the real estate industry will make the industry risk premium center in the medium term likely to rise compared with before. In this process, the internal differentiation of the industry will also intensify, and weaker qualified housing enterprises still need a higher premium to make up for their higher default risk. Therefore, although the yield and spread of real estate high-yield DOLLAR bonds are already at a historical high, there may be a rebound and valuation regression in the subsequent part of the period, but the overall center is difficult to return to below the historical median, and the rebound of the controllable varieties of credit risk is relatively large, while the rebound of bonds with certain credit risk is relatively limited.
Penghua Fund also made a prediction on the follow-up trend of global high-yield bonds in the latest review: "This event has a greater impact on the market, and it is expected that the impact will remain for a period of time, during which the industry will continue to integrate, some have not yet defaulted publicly, but the degree of operation is not good, and the market has reflected the enterprises will face liquidation." At present, the market maintains a cautious attitude towards sector investment, and it is expected that the sector will regain its momentum after the industry risk release is sufficient and the policy margin improves. ”