Prudence Investment Management (Hong Kong) Ltd. is boosting holdings of dim-sum bonds, betting China will allow the yuan to appreciate as much as 5 percent in the next 12 months as the economy averts a “hard landing.”
Convertible bonds sold by Chinese companies overseas offer foreign investors a way to bet on an appreciating yuan, also known as the renminbi, according to Bank of China Ltd.
China’s economy is showing signs of stabilizing after slowing for two straight quarters, with official manufacturing and services indexes rising and gains in gauges of business expectations.
Higher-yielding Dim Sum bonds are a good bet following a recent sell-off that was driven by concern some issuers will struggle to pay their debt, according to BOC International Holdings Ltd.
China’s service industries showed the first pick-up in growth since March, adding to signs the world’s second-largest economy may be stabilizing after a two-quarter slowdown.
"Oil is the spark for the big correction in credit markets and Dim Sum bonds are no exception."
- Steve Wang on Dec 16, 2014