ONE exchange-traded fund shows how investors are increasing bets on a rebound in Chinese property junk bonds. Surging inflows have lifted total assets of the iShares USD Asia High Yield Bond Index ETF to US$1.86 billion from US$383 million at the end of August, an increase of 385 percent. In October alone, the fund attracted a record US$773 million. Some 29 percent of the Singapore-listed ETF’s holdings are in real estate, including notes issued by China Evergrande Group and Sunac China Holdings Ltd. While much of the buying was early -- the ETF fell to a low on Nov. 9 -- Chinese developer bonds have climbed in recent days amid signs the government is taking steps to limit contagion in the property sector. Firms including Allianz Global Investors and Axa Investment Managers say they are looking to increase their holdings, joining Goldman Sachs Asset Management and Oaktree Capital Group. The tide may be turning for China’s property sector, said David Newman, who helps manage about US$3 billion as chief investment officer for global high yield at Allianz Global Investors. “We have begun to buy a few higher quality, lower price bonds for our global portfolios, reducing a long-term underweight.” The iShares ETF rose 0.3 percent in early morning trading, taking its gain since its November low to about 6 percent. It’s still down 14 percent this year. The yield on a gauge tracking Chinese dollar junk bonds has fallen to about 20 percent from a peak of almost 25 percent on Nov. 9. There’s been no defaults by developers since authorities told firms at a meeting Oct. 26 they need to meet their debt obligations. At least four companies missed payments earlier that month. Government efforts to ease funding conditions for the nation’s property sector have focused on higher-rated firms to limit contagion spreading from weak developers. These include allowing real estate companies to resume issuance of asset-backed securities after a three-month market freeze. (SD-Agencies) | 