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China Is Hunting for Foreign Buyers for Its Sovereign Debt

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Re: China Is Hunting for Foreign Buyers for Its Sovereign Debt

#31

Post by hermitdev »

pstrateman wrote: post #4
cm2187 wrote: post #3

Can someone explain to me why an investor would want to invest in a foreign debt and currency from a country that has capital controls and a history of undervaluing its currency?

Investors with other peoples money receiving fees based on annual return. What do they care about the risks?

> What do they care about the risks?

Plenty. You dont last long in finance if you take outsized risks and lose your clients money.

Various firms and investors have varying risk tolerances, but any finance firm worth anything has a risk team that is daily monitoring these things.

Re: China Is Hunting for Foreign Buyers for Its Sovereign Debt

#32

Post by hermitdev »

fratlas wrote: post #23

What would the risk analysis look like for sovereign debt?

I'm not sure exactly what you're asking, but there are probably an untold number of factors when analyzing risk on sovereign debt. Probably amongst the forefront would be history of payment on bonds, currency stability, GDP, tax collection, and government stability.

For instance, I wouldnt buy an Argentine bond - they've failed to make bond payments to such an extent they had a warship seized as collateral in a foreign port. Likewise, Greece has had trouble making payments. GDP is poor, and tax evasion rates are high. To boot, because Greece is on the Euro, it cant even devalue its currency to lessen its debt burden.

Re: China Is Hunting for Foreign Buyers for Its Sovereign Debt

#33

Post by [deleted] »

doctorpangloss wrote: post #26
ianhawes wrote: post #20

Earlier quoted context omitted.

This. China is transitioning quickly to a consumer based economy from manufacturing.

On the contrary, the market is signaling that Chinese consumers are reducing their spending, choosing to save even more . > [These sales] will help finance the deficits without running up a dangerous amount of debt in foreign currency. That's why they're selling! The arbitrage, really, is that sales of this nature are very technical and not well understood by consumers. They signal bear market like a yield curve inve…

[deleted]

Re: China Is Hunting for Foreign Buyers for Its Sovereign Debt

#35

Post by microdrum »

Stryder wrote: post #30
microdrum wrote: post #28

Earlier quoted context omitted.

Interesting line re: this from last year's moviee Crazy Rich Asians: "There is a Hokkien phrase, 'Gar gee nang.' It means, our own kind of people. And you're not our own kind." "Because I'm not rich? 'Cause I didn't go to a British boarding school, or I wasn't born into a wealthy family?" "You're a foreigner. American. And all Americans think about is their own happiness. "Don't you want Nick to be happy?" "It's an i…

Double-standard is the oldest trick in the book for establishing and maintaining power dynamics.

https://news.ycombinator.com/item?id=18821202

Re: China Is Hunting for Foreign Buyers for Its Sovereign Debt

#36

Post by dcposch »

unioncalia wrote: post #18
wonderwonder wrote: post #2

I wonder if China is seeing any impediments due to people being loathe to invest in a country where personal freedoms are very restricted and millions of their citizens are swept up in re-education camps. I would be hesitant from a personal standpoint but most larger wealth funds are probably not so restricted. By the same token neither are most manufacturers.

Not only can you not move money out of China if you have some invested there, you can't even leave! => The US government is warning Americans that if they visit China they may not be able to return home https://www.businessinsider.com/us-china-travel-advisory-201...

> The new China travel advisory is a level two advisory which urges increased caution.

> Other countries or regions with a level two advisory include Algeria, Burma, Antarctica, Belgium, France, Germany, Denmark, and the United Kingdom.

Sounds not particularly serious. Also lol at Antarctica

Re: China Is Hunting for Foreign Buyers for Its Sovereign Debt

#37

Post by jhwang5 »

microdrum wrote: post #28
cm2187 wrote: post #3

Can someone explain to me why an investor would want to invest in a foreign debt and currency from a country that has capital controls and a history of undervaluing its currency?

Interesting line re: this from last year's moviee Crazy Rich Asians: "There is a Hokkien phrase, 'Gar gee nang.' It means, our own kind of people. And you're not our own kind." "Because I'm not rich? 'Cause I didn't go to a British boarding school, or I wasn't born into a wealthy family?" "You're a foreigner. American. And all Americans think about is their own happiness. "Don't you want Nick to be happy?" "It's an i…

Way to get cultural insights into China from a Hollywood movie bro

Re: China Is Hunting for Foreign Buyers for Its Sovereign Debt

#38

Post by pishpash »

wonderwonder wrote: post #2

I wonder if China is seeing any impediments due to people being loathe to invest in a country where personal freedoms are very restricted and millions of their citizens are swept up in re-education camps. I would be hesitant from a personal standpoint but most larger wealth funds are probably not so restricted. By the same token neither are most manufacturers.

Yet Saudia Arabia is considered fine.

Re: China Is Hunting for Foreign Buyers for Its Sovereign Debt

#39

Post by kmonsen »

hermitdev wrote: post #32
fratlas wrote: post #23

What would the risk analysis look like for sovereign debt?

I'm not sure exactly what you're asking, but there are probably an untold number of factors when analyzing risk on sovereign debt. Probably amongst the forefront would be history of payment on bonds, currency stability, GDP, tax collection, and government stability. For instance, I wouldnt buy an Argentine bond - they've failed to make bond payments to such an extent they had a warship seized as collateral in a forei…

This is why there are different rates for bonds, if you only want the safe ones the return will be small as well.

Re: China Is Hunting for Foreign Buyers for Its Sovereign Debt

#40

Post by scoot_718 »

doctorpangloss wrote: post #26
ianhawes wrote: post #20

Earlier quoted context omitted.

This. China is transitioning quickly to a consumer based economy from manufacturing.

On the contrary, the market is signaling that Chinese consumers are reducing their spending, choosing to save even more . > [These sales] will help finance the deficits without running up a dangerous amount of debt in foreign currency. That's why they're selling! The arbitrage, really, is that sales of this nature are very technical and not well understood by consumers. They signal bear market like a yield curve inve…

The idea that Chinese citizens save most of their income has been wrong for about a decade. They're carrying a lot of private debt.
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