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Funds exposed to China Evergrande stocks and bonds

Funds exposed to China Evergrande stocks and bonds

Chinese flags are seen near the logo of the China Evergrande Group on the Evergrande Center in Shanghai, China on Sep 24, 2021. (File photo: REUTERS/Aly Song)

Sharp falls in the stocks and bonds of China Evergrande Group have raised the spectre of losses for global asset managers with exposure to the embattled property developer.

The below graphics show the exposure of asset managers to the Chinese firms stocks and bonds and how they have performed.

On the equities side, various Vanguard funds held a combined US$40 million or so worth of shares as of August, Refinitiv Eikon, data showed, while BlackRock held at least US$13 million across its iShare MSCI emerging market ETFs.

Graphic: Funds with biggest shareholding in China Evergrande Group: https://fingfx.thomsonreuters.com/gfx/mkt/byprjlxlkpe/Fundsper cent20withper cent20biggestper cent20shareholdingper cent20inper cent20Chinaper cent20Evergrandeper cent20Group.jpg

Evergrande bondholders also include some of the world's biggest asset managers, according to the latest data published by Morningstar Direct on holdings of U.S. and cross border funds, as well as Asian bond funds.

The debt is held by funds run by asset managers such as UBS, Fidelity, PIMCO as well as emerging markets focused asset manager Ashmore Group, the data showed.

Graphic: Asian debt funds' holdings in China Evergrande bonds: https://fingfx.thomsonreuters.com/gfx/mkt/movankdnopa/Fundsper cent20withper cent20biggestper cent20exposureper cent20toper cent20Chinaper cent20Evergrandeper cent20Grpup'sper cent20bonds.jpg

Graphic: EM debt funds' holdings of Evergrande bonds: https://fingfx.thomsonreuters.com/gfx/mkt/zjpqkjdxgpx/EMper cent20debtper cent20funds'per cent20holdingsper cent20ofper cent20Evergrandeper cent20bonds.jpg

Some of the funds had raised Evergrande exposure in July and August even as unease grew over its financial situation, Morningstar found.

Shares in Evergrande have recouped some recent losses after the firm announced on Wednesday it had struck a deal to settle interest payments on a domestic bond. It reassured retail investors on Thursday that they were a top priority.

On Monday, stocks ended the day more than 8per cent higher. However, the stock has plunged 83per cent this year, the fourth-biggest decline among Asia's large and mid-cap companies, according to Refinitiv data.

Graphic: Performance of China Evergrande Group's shares this year: https://fingfx.thomsonreuters.com/gfx/mkt/byprjlxkkpe/Performanceper cent20ofper cent20Chinaper cent20Evergrandeper cent20Group'sper cent20sharesper cent20thisper cent20year.jpg

Evergrande missed a US$83.5 million coupon payment deadline on a dollar bond last week and its silence on the matter has left global investors wondering if they will have to swallow large losses when a 30-day grace period ends.

Yield on that bond maturing March 2022 hit a record high of 636per cent on Wednesday, compared to 13.7per cent at the start of the year. It was trading at 570per cent on Monday.

Graphic: Change in China Evergrande Group's bond yields this year: https://fingfx.thomsonreuters.com/gfx/mkt/akvezqnjzpr/Changeper cent20inper cent20Chinaper cent20Evergrandeper cent20Group'sper cent20bondper cent20yieldsper cent20thisper cent20year.jpg

(Reporting by Gaurav Dogra and Patturaja Murugaboopathy in Bengaluru; Editing by Nick Zieminski)

Source: Reuters

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