Most read in October: And then, because Evergrande misses the second payment of the coupon; ESG-Friendly Crypto Emerges As Institutional Demand Rises | Asset owners

China Evergrande Group, one of China’s largest real estate developers, missed two offshore coupon payments in as many weeks.

Neither of the two bonds is yet in default; the conditions of the bond give the group a grace period of 30 days to make their payment. But investors are worried. After years of aggressive expansion, the group is the most indebted real estate developer in the world, with creditors of more than $ 305 billion, the equivalent of 2% of Chinese GDP.

The company’s stock price has fallen 85% from a year earlier and investors have given up hope of a government bailout.

“Evergrande is not the first case of a debt debacle in China. However, the difference with Evergrande is twofold: on the one hand, it is more anchored in the Chinese economy; and second, it’s less likely to get direct government support, ”said Arthur Lau, co-head of emerging bond markets at PineBridge. AsianInvestor.

Crypto products that tick all the ESG boxes are quickly becoming staples for institutional investors, prompting blockchain-focused venture capital and hedge funds to embrace sustainable products and technologies.

As cryptocurrencies such as Bitcoin and Ethereum gain popularity, many believe that the crypto industry’s energy footprint is not sustainable at its current rate, leading investors to focus on environmental issues, social and governance (ESG) to hesitate about digital assets, despite the potential benefits.

However, carbon neutral and ESG-friendly crypto investment vehicles have emerged, and institutions, pension funds and family offices are joining the action.

Singaporean sovereign wealth fund GIC Pte does not view the Evergrande crisis as a systemic risk to the Chinese financial landscape despite the uncertainty caused by the collapse of the real estate giant and China’s large-scale crackdown on sectors ranging from technology to online education.

Lim Chow Kiat, CEO of GIC, said there had been warning signs before the potential collapse of Evergrande took center stage.

“For several years, China has talked about the need to bring financial excesses under control, to have financial leverage in addition to eradicating poverty and environmental pollution,” Lim said at the meeting. the Bloomberg Invest virtual conference on Tuesday.

“These are the three types of great evils that they had to tackle,” he said.

Market watchers discuss the prospect of stagflation – defined as persistent high inflation, high unemployment, and stagnant demand, all at the same time – that weighed on markets in the 1970s.

He shares something similar – sky-high commodity prices, a disappointing unemployment rate, and sluggish economic growth, which is a mix of the current energy crisis and the carbon neutral transition.

While there is no consensus as to whether the market is approaching stagflation or indicating a healthy recovery, real assets are generally preferred amid price spikes, while opinions vary on stocks and bonds.

Asia-Pacific regulators could step up mandatory disclosures, but forward-thinking family offices, it seems, are already two steps ahead of them.

With a persistent lack of standards in Asia, family offices are blazing their own path towards environmental, social and governance (ESG) investing, experts say, even as governments roll out consultation papers for climate risk disclosure .

However, experts say investors continue to struggle to make sense of ESG data, especially struggling with the “social” side of ESG, which remains sorely overlooked by regulators.


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Elaine R. Knight

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