News & Events

On November 10th, the 18th Asian Bond Market Summit – ASEAN edition, organized by “the Asset”, was successfully held in Singapore. A representative from CCXAP was invited to attend the roundtable discussion on "opportunities and challenges in China and India" and delivered a panel speech. This summit brought together industry experts to discuss the Asian economic outlook, the challenges and opportunities of the bond market. Distinguished guests and representatives from globally renowned financial institutions, commercial enterprises, investors, issuers, and more participated in this summit, providing professional insights into the latest trends and hot topics in the bond market.

Roundtable Discussion

The roundtable discussion was moderated by Chito Santiago, the Executive Editor of "The Asset". CCXAP's Assistant Director of Credit Ratings, Vincent Tong, was invited to attend. Other participants in the discussion included Anupam Misra, Head of Corporate Finance at Adani Group; Diwakar Vijayvergia, senior vice president and portfolio manager of Asia fixed income at AllianceBernstein; and Terry Zhang, senior director and head of global strategy and business management at CSPI Ratings; Angus Hui, deputy chief investment officer and head of fixed income at Fullerton Fund Management; Kaustubh Chaubal, senior vice president of corporate finance group at Moody’s Investors Service. The discussion featured in-depth analysis around the opportunities and challenges in both China and India, industry development and other issues.

CCXAP Assistant Director of Credit Ratings, Vincent Tong

Vincent Tong pointed out that the Chinese economy is going through a cyclical adjustment. Economic growth has slowed down in recent years due to retrained endogenous growth and changes in the external environment. Endogenous motivation was low as a result of the epidemic’s impact and the outbreak of risk in a major sector in China. Individual purchasing power and expected income have fallen, leading to low inflation, rising savings rates, and poor private investments. Furthermore, the government has pursued deleveraging, anti-corruption, anti-monopoly, and other initiatives in recent years. Related work strives to increase the quality of economic development while having an immediate influence on economic growth. Externally, the global economy is decreasing, and with rising tensions in international relations, trade and investment growth are also declining. In 2023, the US government imposed restrictions on high-tech investment in China. A movement like this will aggravate tensions between the two countries, and it is needed to guard against the tail risk of changing international relations.

Vincent Tong believes that China's development prospects are optimistic for the following reasons: (1) China has a robust industrial ecological environment, a high level of industrial competitiveness, extensive infrastructure facilities for production and transportation, comprehensive supply chains, and strong market capacity; (2) China continues to exhibit promising growth potential and continues to serve as the driving force behind global and Asian economic expansion. The nation recorded a GDP growth of 5.2% in the first three quarters of 2023 and is expected to grow by 5.5% for the entire year, which sets it apart from numerous other nations; (3) the rise in investment by state-owned enterprises may serve as a mitigating factor against the decline in private sector investment, thereby contributing to market stability; (4) China's ongoing policy of economic opening-up will foster a more conducive business environment.

Vincent Tong also stated that he does not perceive systemic risk in China at this time, but sector risks such as real estate and LGFV, as well as the spillover effect from them, should be addressed throughout the cyclical adjustment. For the real estate sector, the effect of the government’s supportive policies remained inapparent, and market recovery is expected to take longer. Special attention needs to be paid to private real estate companies that have delays in debt extensions and large offshore and onshore debt maturities. For LGFVs, impacted by the moderating macroeconomic growth, tax refund policy, and deep correction in the real estate sector, the local government's fiscal revenue weakened, and LGFVs were under greater financial pressure this year. The central government has promoted the issuance of nearly RMB1 trillion in bonds, which may help improve the financial pressure on local governments and the financing environment for LGFVs in some regions. However, it is expected that under the reallocation of quotas, the positive impact on the weak LGFVs may be low. At the same time, divergence among LGFVs in different regions is large. The increasing number of LGFVs that failed to repay their non-standard financing caused financial resources to be skewed towards LGFVs in economically strong regions, while LGFVs in economically weak regions suffered from greater refinancing pressure and higher funding costs. The default risk may continue to grow for weak LGFVs. In addition, with the push by the central government to separate implicit and explicit debts from local governments, LGFVs accelerate the shift to being market-driven enterprises. Evaluating the commercial risk of LGFVs becomes a more important work for credit rating agencies. Given the current observations, the government’s willingness to support LGFVs remains high, while the ways of supporting them are changing from direct to indirect. The local government tends to inject more operating assets or businesses, which provide revenue streams, into LGFVs. It is believed that the repayment ability of LGFV will become more critical in the future. 

China Chengxin (Asia Pacific) Credit Ratings Co., Ltd. (CCXAP), a wholly-owned subsidiary of CCXI, is the first Chinese credit rating agency to be allowed to engage in overseas rating businesses. In June 2012, CCXAP obtained the Type 10 license issued by the Hong Kong Securities and Futures Commission (providing credit rating services). In March 2023, CCXAP was approved by Hong Kong's Mandatory Provident Fund Schemes Authority (“MPFA”). CCXAP provides credit rating services to domestic and foreign companies and institutions that issue bonds in the overseas market in Hong Kong, Asia Pacific and the European Union.

Supported by Hong Kong-based financial media The Asset, "Asset Forum" is Asia's leading platform for in-depth discussions among companies, investors and regulators. The Forum organizes a variety of high-standards conferences and events and has always been known for its high-level participants and insightful discussion process. The reputation of the Asset Forum allows for the participation of the most influential leaders in the industry as representatives and speakers. The Asia Bond Markets Summit, now in its second decade, is the region’s longest-running continuous fixed-income summit which brings together issuers, investors, policymakers and other stakeholders involved in Asia’s bond markets.