Source: Bloomberg, Unigestion, as of 15.10.2021
China’s recent slowdown in the result of two significant factors: cyclical (rising commodity prices) and structural (changes in the engines of growth). This combination of cyclical slowdown and structural, political and industrial changes has resulted in a significant adjustment in Chinese asset risk premia. Whether at the sector or country level, the repricing has been significant and a source of strong underperformance. Our chart highlights the magnitude of this adjustment in terms of China’s CDS level, which has risen by 22 points since the end of July, as well as in terms of high yield corporate interest rates and the equity market, which has a relative performance to MSCI US of -18% in Q3 and -27% since the beginning of the year.
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