February 8, 2017 / 8:23 AM / a year ago

ASIA CREDIT CLOSE: Credit flat, Chinese developers outperform

HONG KONG, Feb 8 (IFR) - Asian credit markets were little changed on Wednesday, however, Chinese property developers rallied on hopes that their earnings might beat analyst estimates.

Traders and analysts said that investors snapped up stocks and bonds of Chinese property developers today after sales reports for January came stronger than expected.

“The market was very bearish about the sector before the Lunar New Year with concerns about policy tightening,” said a Hong Kong-based credit analyst.

“However, the better-than-expected January sales have made the market realise that the Chinese developers might have been undervalued and might lead to revisions in earning estimates for the sector.”

The top three Chinese developers, China Vanke, Country Garden and Evergrande all reported strong sales growth and accounted for more than 30% of the sales among the top 100, according to a report by Lucror Analytics.

Country Garden’s H-shares jumped over 8%, while its US dollar 2020 bonds gained a quarter of a point, according to the analyst.

The iTraxx Asia ex-Japan investment-grade index was spotted 0.4bp wider at 108/109.5. New issues by Chinese banks were mixed, with Shanghai Pudong Development Bank’s new 2020s weaker and Bank of China’s new 2020s slightly firmer.

Reporting by Ina Zhou; Editing by Vincent Baby

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