摩根士丹利——中國經濟、戰略和行業：信貸風險上升的影響

新聞 06-22

中國：經濟、戰略和行業-信貸風險上升的影響

要點：China』s corporate bond defaults could rise amid a reduction in

non-standard financing, but remain idiosyncratic rather than

systemic. Policymakers could fine-tune to ensure a milder pace

of credit tightening. We prefer China"s A-shares (vs. offshore)

and investment-grade bonds (vs. high-yield).

中國企業債券違約可能導致非標融資的減少，但仍然是個別，而不是系統性的。政策制定者在信貸緊縮中可以微調以確保更溫和的步伐。

。我們更喜歡中國的A股（VS離岸價）和投資級債券（相對於高收益）。

Idiosyncratic bond defaults in China; systemic financial risk unlikely: Tighter financial conditions amid a cleanup in shadow banking activities have led to an increase in the credit risk premium and a steepening in credit curves for Chinese corporates. While we see a rise in bond defaults in 2H18 amid redemption pressures, which could be worrisome for investors, we believe they remain idiosyncratic in nature and systemic financial risk is unlikely, considering the small size relative to the overall financial system, stable interbank interest rates, and

more resilient economic fundamentals than in previous stretched periods in 2014-16. We expect the pace of tightening could be fine-tuned, which could include further RRR cuts, open market injections and window guidance, to keepcredit risk contained.

Fixed income strategy: Despite the recent cheapening in valuation of Chinese high-yield (HY) bonds, we believe the current valuation has not priced in the supply risk and weak demand from onshore Chinese investors, and we still prefer Chinese investment-grade (IG) bonds. Within China HY, we prefer property over industrials, since we think the default risk is higher in the latter. Meanwhile, the fine-tuning of policy tightening could cause Chinese rates to rally, and we position for this trend through receiving 1y CNY NDIRS.

Equity strategy: We continue to see limited upside at the broad equity market level amid tighter financial conditions and cautious risk appetite of investors.

That said, we think the continued improvement in paying ability by asset-heavy Old Economy sectors since 2017 has meant a low chance of systemic risk or a "flash crash" scenario in the equity market. We prefer China"s A-share market over offshore through stock picking, and offer a list of stocks rated OW by Morgan Stanley with stronger balance sheet and liquidity metrics.

Sector implications: We do not see systemic financial risk to the property sector, since the cash flow driver – contracted sales – remains strong. HK-listed PRC developers should outperform A-share listed developers, and SOE developers should outperform non-SOE ones. We think COLI will benefit the most amid widening funding cost advantages. We also like the property management industry for its defensive nature amid tighter liquidity; our top pick there is ALiving.

Meanwhile, our banks team for China believes this would not change the path of moderation in NPL formation, and misperceptions create goodopportunities for banks.