China Heads Towards Another Record Year of Onshore Bond Defaults

The video discusses China's onshore defaults and their impact on the market, suggesting that the low default rates are not systemic. It explores investment strategies in Chinese bond markets, emphasizing the importance of understanding submarkets and potential arbitrage opportunities. The role of the PBOC and its policy actions are also examined, highlighting their influence on bond market attractiveness and investment strategies.

What is the current interpretation of onshore defaults in China according to the market?

• They are considered systemic risks.

• They are seen as a rationalization of the market.

• They are causing panic in the market.

• They are ignored by investors.

What are the three submarkets within the Chinese bond market?

• CNH, CNY, and US dollar bond markets

• AAA, AA, and A bond markets

• Onshore, offshore, and global bond markets

• Corporate, government, and municipal bond markets

What is necessary to effectively engage in cross-market arbitrage in the Chinese bond market?

• High-risk tolerance

• Access to insider information

• A grassroots feel for the market and thorough research

• A strong understanding of global markets

What is the expected policy action of the PBOC for the next year?

• Incremental easing of 15 to 25 basis points

• Increase in policy rates

• No change in policy rates

• Aggressive tightening of monetary policy

How does the PBOC's policy action affect the attractiveness of the onshore bond market?

• It has no impact on the market.

• It makes the market less attractive.

• It increases the market's attractiveness due to reasonable hedging costs.

• It causes volatility in the market.