KUALA LUMPUR, Jan 7 (Bernama) -- Bursa Malaysia’s benchmark index rebounded from earlier losses to close at its intraday high on Wednesday, gaining 0.27 per cent in late trading as buying interest returned to selected heavyweights. At 5 pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) advanced 4.48 points to 1,676.83 from Tuesday’s close of 1,672.35. The benchmark index opened 0.88 of-a-point lower at 1,671.47 and subsequently hit a low of 1,665.94 during the mid-morning session before gaining momentum toward closing. On the broader market, losers led gainers by 565 to 512, while some 526 counters were unchanged, 1,046 untraded, and 10 suspended. Turnover improved to 2.73 billion units worth RM2.76 billion versus Tuesday’s 2.66 billion units worth RM2.76 billion. Dealers said that investors were cautious following geopolitical developments in Asia.
When I woke up today, I was caught astounded by an article on Bloomberg, relating to the China's bond market that is seeing higher default rates.
Is this the new reality? If it is, I think there's every reasons to be cautious since China is the world's third largest bond market by value.
According to Bloomberg's article on https://www.bloomberg.com/news/articles/2017-09-10/china-s-latest-bond-default-is-a-cautionary-tale-for-investors
Wuyang Construction Group Co., a builder in the eastern province of Zhejiang, defaulted on two put-able notes totaling 1.36 billion yuan ($209 million) last month. Bondholders are now up in arms, claiming in an Aug. 23 filing posted on the Shanghai Stock Exchange’s website that the company didn’t disclose a raft of transgressions in sale documents for the bonds, which were sold in 2015. Three phone calls to Wuyang Constructions’ headquarters in Hangzhou went unanswered, and the company didn’t respond to a fax from Bloomberg News.
The incident is a good example of the teething problems China is seeing as it works to develop its $9 trillion bond market -- made more accessible to offshore investors via a connect with Hong Kong in July.
But it is not the only companies with such an issue.
A quick look at the data provided by Bloomberg on China's onshore bond market's default since 2014.
Well, the good news is most of the bonds are still hold locally, with only 1.5% of the holdings are foreigners.
The lack of disclosure especially on critical information has continued to be an issue for debt investors in China. I'm not too sure but this definitely doesn't sound like a good news for a country heavily in debt.
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