KUALA LUMPUR, Oct 20 (Bernama) -- Bursa Malaysia’s benchmark index edged higher at the close as bargain hunting emerged following Monday’s sharp sell-off, although it narrowly failed to reclaim the 1,600 level, said an analyst. At 5 pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) gained 3.83 points, or 0.24 per cent, to 1,599.58 from Monday’s close of 1,595.75. The index opened 3.18 points lower at 1,592.57, marking its intraday low, and reached an intraday high of 1,602.83 in early trading. On the broader market, decliners outnumbered gainers 751 to 331, while 499 counters were unchanged, 1,259 untraded and 10 suspended. Turnover rose to 2.86 billion units worth RM2.42 billion against Monday’s 2.49 billion units worth RM2.38 billion.
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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