亚洲-信贷策略-亚洲信贷策略2020：捡硬币.docx

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1、12 December 2019/卜 HSBCGlobal ResearchTHIS CONTENT MAY NOT BE DISTRIBUTED TO MAINLAND CHINAAsia Credit StrategyAsia Credit StrategyFixed IncomeCredit2020: Picking up penniesAsia A passive approach to investment should work best next year Prefer high-yield sector; we go overweight on China property F

2、or the full year, we expect total returns for iBoxx AHBI-Corp to be an impressive 10.8% vs 6.9% for iBoxx ADBIKeep it simple. We advise taking a fairly passive approach to managing credit portfolios next year as the positives and negatives are delicately balanced. In our view, investor expectations

3、for significant credit spread compression and capital gains w川 be kept in check by the muted growth outlook and the high debt levels that are lurking in the background. For us, this means investors should be content to clip coupons, with a tactical bias towards adding risk during bouts of volatility

4、 triggered by disappointing data or around geopolitics.Prefer high yield. We recommend a bias towards the high yield (HY) corporate sector over the broader investment grade (IG) credit space in 2020 because of the generous spread cushion established over the past year. We think the HY sector will ge

5、t a favourable re-rating from much lower gross and net issuance after last years heavy supply pipeline. The HY sector should benefit from investors5 efforts to bolster total returns1 in the knowledge that policymakers will keep monetary conditions accommodative for some time.Upbeat on China property

6、. We change our stance on China property for 2020 to overweight from neutral. We expect the government to gradually loosen its policy on home purchase restrictions and/or price caps, and also believe that better onshore liquidity will improve market access for developers. From a tactical standpoint,

7、 we believe the sharp decline in gross USD bond issuance will provide technical support.Our 2020 forecasts. We think the best quarterly returns will be in 1Q. This is based on optimism that the worst of the trade row between China and the US is probably behind us and expectations that China will soo

8、n take bolder policy action to support growth. We forecast the iBoxx ADBI and AHBI-Corp will generate 1Q total returns of 3.93% and 4.22%, respectively. For the full year, we expect total returns for iBoxx AHBI-Corp to be an impressive 10.8% vs 6.9% for iBoxx ADBI. We have iBoxx ADBI and AHBI-Corp s

9、pread forecasts for end-2020e at 155bp and 570bp, respectively, compared with 169bp and 626bp as of 6 December 2019.This report includes our updated country and sector weightings, our forecasts for primary bond issuance, and the main risks to our view. We also briefly look back on what was a tricky

10、year for investors and credit strategists alike.This video is available as a podcast Subscribe viaresearch.hsbc Dilip ShahaniHead of Global Research, Asia PacificThe Hongkong and Shanghai Banking Corporation Limited dilipshahanihsbc .hk +852 2822 45201 Total returns are defined as the sum of capital

11、 returns and accrual returns in USD.This report replaces that of the same title and date to correct Exhibit 16 - 2020 issuance forecasts by market and sector.Disclosures & DisclaimerThis report must be read with the disclosures and the analyst certifications in the Disclosure appendix, and with the

12、Disclaimer, which forms part of it.Issuer of report: The Hongkong and Shanghai Banking Corporation LimitedView HSBC Global Research at: s :/ research, hsbc. com13. Asian USD bonds issuance forecastsUSDm2019e issuance (G)2019e issuance (N)2020 redeem2020e upper (G)2020e lower (G)2020e upper (N)2020e

13、lower (N)Sovereigns18,4507,9315,50717,00015,50011,4939,993Financials80,00013,60375,10075,00055,000(100)(20,100)IG corps99,50047,10843,71290,00080,00046,28836,288HY corps109,17577,22842,77873,00059,50030,22216,722Total307,125145,870167,097255,000210,00087,90342,903Source: Bloomberg, HSBC estimatesWe

14、believe that Chinese issuers will dominate the non-sovereign pipeline calendarElsewhere, we believe that Chinese issuers will dominate the non-sovereign pipeline calendar in 2020, as they did this year. However, investors will be paying increased attention to credit quality after this years unantici

15、pated high level of corporate defaults and problems with smaller financial entities. Furthermore, the Chinese regulator will likely continue to limit offshore financing quotas on concerns about a possible currency mismatch in the future, especially with the RMBs increased convertibility in terms of

16、the capital account balance.We deem this to be a prudent macro policy decision taken after observing other countries facing repeated external debt servicing problems because most local corporates do not actively hedge their currency risk. Fig. 14 shows that Chinese corporates are already in a signif

17、icantly better position than those from other emerging market countries. We would go further to say that Chinese gross US dollar primary issuance is likely to remain flattish for the coming few years, as the authorities remain focused on containing the growth in leverage (see Fig. 15).14. Emerging m

18、arkets* debt exposures by currencies% ooooooooooo 0987654321% ooooooooooo 0987654321一&s_ =ZB岳 eolw.s -S8Z0 AJ&urlH ACDwnl oox三 LCYHUSDroqejv .sqqEooo REu E-ssnH PUBod 卷o IIOPU-W山 qpu_ PUBalllOtherSource: CEICChinese gross issuances to stay flattish in coming years350,000300,000300,000250,000E 200,00

19、0150,000100,00050,000, ullllliIIIIIIrcoiocoCN g CMCXJg CM Mainland ChinaNon-Mainland ChinaSource: Bloomberg, HSBC estimates15. 2020 issuance forecasts by market and sectorSource: Bloomberg, HSBC estimatesUSDm2019egross issuance2019e net issuance2020egross issuance(Low end)2020egross issuance(High en

20、d)2020 maturity /call2020e high-end net issuance2020e high-end net issuance vs 2019e net issuanceAsian Corporate HYMainland China90,50064,39343,00053,00035,780亿220-73%-Mainland China property HY63,50049,83330,00035,00027,2777,723-85%-Mainland China LGFV HY13,0007,7613,0006,0001,6304,370-44%-Mainland

21、 China other HY14,0006,79810,00012,0006,8735,127-25%India7,0756,3236,0007,0007636,237-1%Hong Kong1,1057811,5002,0001,498502-36%Indonesia2,4751,5783,0004,0001,8312,16937%Others8,0204,1536,0007,0002,9064,094-1%Asian corporate HY issuance109,17577,22859,50073,00042,77830,222-61%Asian corporate HY redem

22、ption31,94842,77842,778Asian Corporate IGMainland China63,14730,86050,00055,00030,90024,100-22%-Mainland China LGFV17,08211,33210,00012,0006,8005,200-54%-Mainland China central SOEs23,6399,29125,00026,00017,4508,550-8%-Mainland China local SOEs9,0006,2628,0009,0003,4005,600-11%-POEs13,4263,9757,0008

23、,0003,2504,75019%Hong Kong11,1503,5998,0009,0004,6744,32620%Korea6,6503,4907,0008,0004,7503,250-7%Singapore2,1504000500050025%India7,2134,8136,0007,0001,0006,00025%Others9,1903,9469,00010,5002,3888,112106%-Indonesia5,6755,5297,0007,5003387,16230%-Malaysia1,000(2,000)1,0001,5002,050(550)NA-Thailand1,

24、5154391,0001,50001,500242%-Philippines0(1,021)0000NA-Taiwan1,0001,0000000NAAsian corporate IG issuance99,50047,10880,00090,00043,71246,288-2%Asian corporate IG redemption52,39143,71243,712Asian corporate gross issuance208,675139,500163,000Asian corporate net issuance124,33653,01076,510Detailed analy

25、sis of our forecasts for the Chinese HY corporate sector shows a noticeable drop in primary issuance, attributed to themes discussed above (see Fig. 16). Away from the Chinese sector, the gross and net issuance forecast numbers for both the IG and HY corp spaces in 2020 are like to follow a similar

26、pattern to this. Here, we again believe that local regulators are keen to speed up the development of onshore capital markets, like China, in order todiminish the FX risk related to the corporate sectors failure to properly hedge offshore borrowings. We would single out Indonesia as an example of di

27、fficulty in managing offshore borrowings properly which can then adversely impact currencies and domestic interest rates.Market and sector preferencesMarketsIn terms of portfolio construction by investors, for 2020, we start with the approach of having a balanced viewpoint between the interplay of f

28、undamental and technical influences. The slightly positive credit spread conviction arises from pressure on market participants to maintain performance in a persistently low interest rate environment where the fundamentals are deteriorating, albeit in slow motion. We have a modest bias for the HY co

29、rporate space. This is based on the belief that corporate defaults will not surprise sharply on the upside, coupled with a projected drop in net primary issuance, especially from Chinese developers. This should result in a new, slightly tighter credit spread trading range for 2020.If we compare the

30、Asia IG and HY credit markets with other emerging markets, we cannot really get excited about Asia attracting inflows from global fund managers. There is no obvious excess spread here and, if anything, the Asian credit market is looking a bit rich, in our opinion (see Fig. 17 and 18). Put another wa

31、y, we cannot envision a significant uplift in foreign capital allocation to drive credit spreads materially tighter from current levels.17. Spreads of Asian credits and other EM markets (IG)2802301801308018. Spreads of Asian credits and other EM markets (HY)6/166/176/186/19ASIA IGCEMEA IGLATAM IG US

32、 IGSource: BloombergASIA HYCEMEA HYLATAM HY US HYSource: BloombergOur market preferences are shown in Fig. 19. The only change we have made is to move Indonesia from slight underweight to neutral now that the presidential election is out of the way and the new administration is focusing on lifting t

33、he sustainable real GDP growth rate and paring back the dependence on volatile foreign portfolio inflows. Elsewhere, we still have India at a slight underweight to reflect concerns about local corporate debt hurdles and a weakened financial sector impeding faster economic activity for the foreseeabl

34、e future. There is a growing risk that local financial markets might have become unhinged and that INR weakness gathers momentum, especially if the authorities are perceived to be moving away from adopting prudent fiscal and monetary policies to reverse slumping economic growth.19. Our preferences o

35、n individual marketsOverweight Hong Kong SingaporeOverweight Hong Kong SingaporeSlight OverweightThailand VietnamNeutralMainland ChinaIndonesia KoreaMalaysiaSlight UnderweightIndia PhilippinesUnderweight Sri Lanka* We do not have coverage on Mongolia, Pakistan and Taiwan. Source: HSBC* We do not hav

36、e coverage on Mongolia, Pakistan and Taiwan. Source: HSBCSri Lanka stays as the lone underweight. The deteriorating fiscal position plus weak external balances make the country quite vulnerable to exogenous shocks. Moreover, there is risk that the reform programme agreed with the IMF might be rolled

37、 back after the parliamentary elections, expected in late 1Q20. If this were to happen, it would likely push the IMF to reassess the terms of the lending programme with the government. We feel this would undermine investor sentiment, and hence make it harder for the authorities to tap the offshore c

38、apital markets for new financing and repayment of existing debts. Note that Fitch estimates thatexternal debt repayments at USD19bn in 2020-23 against current FX reserves of USD7.8bn (Bloomberg, 21 November 2019).On the positive side, we keep the Hong Kong and Singapore markets at overweight due to

39、the high quality of issuers and the exceptionally modest supply which adds to their scarcity appeal. Vietnams slight overweight reflects an improving landscape from the perspective of corporate governance, legal recourse and financial sector strength. Thailands smooth general election allows the new

40、 administration to shift attention to lifting the sustainable economic growth rate and hence we maintain a slight overweight.20. Our preferences on individual sectors in 2020Source: HSBCSource: HSBC8， Non-cyclical Sovereign Quasi-sovereign Bank Conglomerate Technology UtilitiesoModerate China Proper

41、ty Oil & Gas Telecoms Non-Bank Financials Renewables GamingCyclical Basic Resources Indonesia Property Retail Metal & MiningEpicentre Autos China IndustrialsSectorsWe change our stance on China property to overweight from neutral in 2020We change our stance on China property to overweight from neutr

42、al in 2020We change our stance on China property to slight overweight from neutral in 2020. We expect the Chinese authorities to gradually loosen their policy stance on home purchase restrictions and/or price caps, and also believe better onshore liquidity will improve market access for developers.

43、From a tactical standpoint, we believe the significant decline in gross issuance (up to USD36bn in 2020e versus USD63.5bn in 2019e, down 45% y-o-y) and net issuance (up to USD7.7bn in 2020e versus USD49.8bn, down 85% y-o-y) of China property HY USD bonds will provide technical support. The huge decl

44、ine anticipated in China property USD bond supply is driven by tighter scrutiny by the National Development and Reform Commission (NDRC) towards incremental USD bond financing of China developers as well as LGFVs, the two sectors that face the biggest foreign currency asset-liability mismatch.We are

45、 cautiously optimistic on the overall Indonesia HY corporate sector. We are turning positive about the countrys economic growth and the potential pick-up in business activities as the government has turned its focus back to growth after the election. Operating challenges may remain but the uncertain

46、ties should gradually clear following releases of regulatory and policy changes. The rupiahs FX movement is less of a concern, too. Property companies may be in a better position to ride the potential growth, while coal players are still facing challenges from low commodity prices. As a whole, we expect corporates to be opportunistic in visiting the USD bond market to make early preparations for refinancing. This is despite the small amount of bond redemptions in 2020. There is a maturity wall of over USD3.5bn i