Caution urged on China SOE bonds

Fidelity says investors should be careful when purchasing the notes of Chinese state-owned enterprises since these can have varying levels of government support.

Caution urged on China SOE bonds
Tightrope: only around 17% of Chinese SOEs receive strong day-to-day government support.

State-owned enterprises are not as homogeneous in China as they are in other parts of Asia, so investors should be extra careful when buying their bonds, Fidelity Worldwide Investment said in a media press briefing today.  

Only around 17% of Chinese SOEs receive strong day-to-day government support, with 28% getting medium-to-strong day-to-day support and the remainder low but some levels of support, Fidelity said, citing a recent study of the sector.

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