China Is Back To Running Massive Trade Surpluses But SOEs Are Defaulting on AAA Rated Bonds

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WallStForMainSt
Published at : 18 Dec 2020
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While China runs aboslutely massive trade surpluses thanks to being nearly the sole exporter of masks, gloves, PPE and other medical and pandemic related equipment, China's currency, the Yuam, has been allowed to strengthen by the PBOC, China's Central Bank, to around 6.5 Chinese Yuan to the Dollar the last few months.

Rapid China Inflows Spur Call for Strongest Yuan Since 1993 https://finance.yahoo.com/news/relentless-china-inflows-spur-call-230000959.html

Because of these factors, more foreign institutional investors want to buy Chinese bonds.

However, beneath the surface there are major issues with Chinese State owned Enterprise (SOE) bonds as a number of AAA rated SOEs have surprisingly defaulted on their bonds in the last 2 months.

Foreign investors are ignoring these risks for now and capital is still pouring into China.

Investors Are Learning to Live With China’s Credit Defaults https://finance.yahoo.com/news/investors-learning-live-china-credit-013326372.html

Other articles about Chinese SOE bond defaults from the last 2 months:
1) China Lenders’ Holdings of Corporate Debt Fall as Defaults Climb https://finance.yahoo.com/news/china-lenders-holdings-corporate-debt-043919402.html
2) China State Firms Once Deemed ‘Safe’ Now Rocked by Defaults https://www.msn.com/en-us/money/other/china-state-firms-once-deemed-e2-80-98safe-e2-80-99-now-rocked-by-defaults/ar-BB1bBWKe
3) These AAA Bonds Are Tumbling as China Default Fears Spread https://ca.finance.yahoo.com/news/aaa-rated-bonds-tumbling-china-200000548.html
4) RPT-ANALYSIS-China's bond defaults show Beijing's war on debt is back https://www.reuters.com/article/china-debt-soe-idUSL1N2IA0JK
5) China debt defaults stoke unease about 'broader market contagion' https://finance.yahoo.com/news/china-debt-defaults-stoke-unease-093000666.html

MSCI to remove 10 Chinese securities from its indices after US blacklist https://www.scmp.com/news/china/article/3114106/msci-remove-10-chinese-securities-its-indices-after-us-blacklist

Nasdaq to remove four Chinese companies' shares from indexes after U.S. order https://finance.yahoo.com/news/nasdaq-remove-shares-4-chinese-230744021.html

Dueling Perspectives On China's Economic Reality (w/ Kyle Bass and Michael Pettis) https://youtu.be/LKjA_yPyaYM

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