September, 2023
The Asian credit market was softer in September, led by investment grade credits as UST curve steepened with the benchmark 10y UST yield rose more than 40bps for the month. Asian High Yield credits fared better due to their shorter durations and hefty credit spreads. During the month, we were active trading the investment grade new issue market, and took some profits on our Macao gaming exposure. We also trimmed select China property names.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/PAIF-September-2023.pdfAugust, 2023
The Asian credit market was marginally soft for most of August, with high yield issues lagging the broader market. However, a strong rally followed, which narrowed the losses, towards the end of the month after easing measures were announced by the Chinese government in the last week of the month. During the month, we reduced our China property and convertible bond positions and reinvested some beaten-down names that offer good value. We were also active in the investment grade new issue market.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/PAIF-August-2023.pdfJuly, 2023
The Asian credit market remained stable in July. High yield credit spreads widened, delivering negative total returns, while investment grade bonds were roughly flat. After the rate hike pause in the June meeting, the FOMC resumed a +25bps rate hike in July while leaving the door open for future rates increase, depending on future data. During the month, we switched some of the portfolio’s short-dated issues into longer-dated ones, which should support the fund as rates peak.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/PAIF-July-2023.pdfJune, 2023
The Asian credit market was stable in June, with high yield issues outperforming investment grades. During the month, the Fed temporarily paused its rate hike but hinted a few more could be coming for the rest of the year to control inflation. The US Treasury market was little changed.
We added some long-dated investment grade bonds as valuations have become attractive.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/PAIF-June-2023.pdfMay, 2023
In May, the disappointing economic data from China impacted risk sentiments in both the equities and credit markets. The HSI shed more than 8% during the month, while the credit markets fared better, with the JACI composite finishing the month down by about 0.8%. Meanwhile, JACI High Yield Index gave up roughly 3%. We took advantage of the higher US Treasury yield and added some long-dated investment grade issues with attractive valuations. Other than that, there was little change in our portfolio positions.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/PAIF-May-2023.pdfApril, 2023
After a strong year-to-date rally, the Asian credit markets took a breather in April with mixed performance. Investment grade bonds outperformed, while high yield performance was flat to slightly negative. There was some profit-taking in the China property high yield space, while the rest of the market was relatively quiet for the month.
File:March, 2023
The collapse of Silicon Valley Bank and the hastily arranged acquisition of Credit Suisse by rival UBS sent risk appetite sharply lower in March. The benchmark 10-year US treasury rallied strongly, but the banks’ additional tier-1 capital (AT1) space suffered. The Asian credit markets performed relatively better, posting positive monthly gains. China credits gave up some YTD gains due to profit-taking. We turned slightly defensive and raised our cash level. Managing the quality and liquidity of our portfolio remains one of our priorities.
File:February, 2023
The Asian credit markets took a breather in February, as rising US Treasury yields once again triggered inflation concerns and the upcoming Fed’s rate decision. The lack of further positive catalysts in the market also brought out some profit-taking activities. The universe of both investment grade and high yield credits was down by more than 1% for the month. We took profits on some positions with high dollar prices and reinvested into others with lower prices. We also continue to focus on managing the quality and liquidity of our portfolio.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/PAIF-February-2023.pdfJanuary, 2023
Following a strong rebound in December, the Asian credit markets continued to march higher in the first month of 2023, driven by a series of supportive measures by the Chinese government and expectations of a fading zero-Covid policy and hence economic reopening. The broader market was up nearly 3%, with high grade bonds up 2% and high yield credits gaining about 7% for the month. There were very few changes in our portfolio during the month, and we continue to focus on managing the quality and liquidity of our portfolio.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/PAIF-January-2023.pdfDecember, 2022
The Asian credit markets carried their strong rebound in November and consolidated their gain further in December. High yield credits marched another few points higher, while investment grade bonds were stable to slightly up. The year-end rally helped narrow the whole-year loss in an otherwise extremely difficult, volatile market of 2022. The portfolio has not changed much and managing the quality and liquidity of portfolio remains the key priority.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/PAIF-December-2022.pdfNovember, 2022
The Asian credit markets staged a strong rebound in November after the Chinese government announced a series of supportive policies for the economy and the property sector. The expectation of a less stringent zero-Covid policy also boosted market sentiment. For the Greater China credits in our portfolio, China property gained, while Macao gaming credits also strengthened following the announcement of license renewal, with no surprise. Managing the quality and liquidity of our portfolio remains our priority in the current market.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/PAIF-November-2022.pdfOctober, 2022
October was an eventful month with the conclusion of China’s 20th Party Congress. President Xi Jinping was re-elected for the third time, and members of the next Politburo Standing Committee were chosen. Markets ended the month in a bearish tone, with the HSI tumbling below 15,000 and the Chinese renminbi weakening past 7.3 per US dollar. The Asian credit markets also retreated, with high grade issues losing about 2.7% and high yield down by more than 9%. The China property high yield bond universe was down by more than 30% in October.
During the month, our fund shredded its China property exposure, as we view the new political environment will likely delay the recovery in the property sector. We maintained our exposure to Macao gaming and defensive names in Indonesia and India’s energy and material sectors. Managing the quality and liquidity of our portfolio remains the top priority in the current market.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/PAIF-October-2022.pdfSeptember, 2022
In September, the surging bond yields, the US dollar’s strength, and geopolitical events sent risk assets tumbling globally. During the month, the S&P and the HSI were down by around 8% and 14%, respectively. The US Treasury ceded by more than 3%, while Asian credits were generally down about 4%, and Asian high yield dove over 7%. For our fund, we continued to actively manage our China property exposure. We maintained our Greater China exposure by adding to the Macao gaming sector and continued to add defensive names coming from the energy and material sectors in Indonesia and India. As always, managing the quality and liquidity of our portfolio remains the priority in the current market.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/191941867.pdfJuly, 2022
In July, the Asian credit markets continued to drift with no clear direction. While the broader market roughly remained unchanged during the month. Investment grade issues outperformed as the US Treasury yields rallied. High yield issues, especially Chinese property, continued to struggle. During the month, we lowered our overall Chinese property exposure by shedding more concentrated names. On the other hand, we added defensive names from the energy and material sectors, while also actively trading in the new issues market. As we have repeatedly mentioned, managing the quality and liquidity of our portfolio remains our priority.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/190109766.pdfJune, 2022
June was a volatile month for both the rates and credit markets. Although the benchmark 10-year US Treasury yield finished the month at about the same level at the beginning of the month, it was highly volatile, with the yield level reaching almost 3.5% in the month. Investment grade and high yield credits both underperformed. Due to idiosyncratic events and poor macro factors, China high yield bonds saw one of their worst monthly performances. For the month, we continued to manage the risk of our exposure to China property and selectively added to India and Indonesia names. Our priority remains to manage the quality and liquidity of our holdings.
We remain cautious about China’s real estate market. We continue to search for any signs or evidence of concrete government measures to support the sector and monitor how they would impact issuers. We expect volatility to remain and continue to monitor the market and act accordingly based on market conditions.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/189230221.pdfMay, 2022
US Treasury yields stabilized in May, with the 10-year yield benchmark trading mostly between 2.7% to 3.0% during the month. On the back of a stable US Treasury, Asian investment grade credits were steady. However, Asian high yield credits underperformed as a few credit incidents, particularly an issuer in the Chinese property sector with an SOE background announcing an unexpected debt extension, hit the market by surprise. Our fund does not hold a position in the aforementioned SOE-related issuer. For the month, we continued to risk manage our exposure to China property. Meanwhile, we added to the Indian renewable and resources sectors. In the current challenging environment, our priority remains to manage the quality and liquidity of our holdings.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/188007313.pdfApril, 2022
US Treasury yields continued to climb in April as the market expected a more hawkish Fed. In the Asian credit markets, interest rate-sensitive investment grade credits underperformed, while high yield credits fared better. China property high yield credits were relatively flat for the month after a decent performance pickup in late March. The market continued to focus on inflation expectations and the Fed rate hike trajectory. For the month, we continued to manage the risk of the Fund’s exposure to China property. We continue to focus on quality and liquidity in our holdings.
During the month, Chinese authorities announced their intention to support the country’s economic growth and the healthy development of the property sector. As we wait for any supportive measure that the government may roll out, we continue to hold a cautious view of China property. The market remains sensitive to idiosyncratic events. Therefore, sporadic volatility should be expected. We will continue to monitor the market and will act accordingly.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/187239092.pdfMarch, 2022
In March, the rapid rise in US Treasury yields resulted in losses for the Asian credit markets. High-grade and longer-duration bonds led the decline. While China property high yield credits staged a rebound midmonth, they ended the month in negative territory. The uncertainties caused by the conflict between Russia and Ukraine, high commodities prices, and global inflation continue to be key market concerns. During the month, we continued to control our overall exposure to China property and traded around a few names in the sector. We continue to emphasize the quality and liquidity of our holdings
The China property high yield credit sector continues to be in a very challenging environment. We remain cautious of the sector, albeit with some recent positive news on the policy front. The market remains sensitive to idiosyncratic events, therefore, sporadic volatility should be expected. We will continue to monitor developers’ liquidity situations and will act accordingly.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/186302134.pdfJanuary, 2022
The selloff momentum in the Asian credit markets continued from last year, ending January down about 2% in the first month of 2022. China property high yield credits continued to suffer, down about 22% at one point during the month but ended the month at around -10%. Risk appetite remains low, as negative headlines about Chinese developers continue to dent investor confidence. We traded around a few names during the month with continued emphasis on quality and liquidity. There were no major changes in the portfolio.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/184124704.pdfDecember, 2021
December was a quiet month in the Asian credit markets. As expected, the market traded on a slightly weaker tone with limited liquidity as we approached the year-end. China property high yield credits were also quiet, but the cautious tone remains. There was not much change in the portfolio during the month. The overall strategy remains migration to better quality names.
The China property high yield credit sector is not out of the woods yet. We remain cautious on the sector at least before China’s Two Sessions in March. In the meantime, as the market remains sensitive to idiosyncratic events, short-term volatility should be expected. We will continue to monitor developers’ liquidity situation and take advantage of market weakness to accumulate quality names.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/182657178.pdfNovember, 2021
Challenges remained for China property high yield credits in November. Negative headlines continued to hurt confidence among investors towards the asset class. In addition, news of a new coronavirus variant, Omicron, exacerbated pessimism, sending shockwaves to both equity and bond markets globally. During the month, we continued to add quality benchmark property names at cheap valuations, while reducing names with high exposure to idiosyncratic risks. In November, the portfolio’s AUD currency hedge was 20%. We will continue to monitor the AUD exposure and adjust our currency hedge as we see fit.
We expect short-term volatility to continue as the market remains sensitive about idiosyncratic events. We expect investors to stay cautious in December, with much attention to managing year-end liquidity. Looking ahead, it’s important to continue to monitor developers’ liquidity situation and take advantage of adding good names on market weakness.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/181885150.pdfAugust, 2021
In August, the portfolio’s AUD currency hedge was 21%. We will continue to monitor the AUD exposure and adjust our currency hedge as we see fit.
After the dismal performance of Asia high yield bonds in July driven by the events at Evergrande, the asset class saw a strong rebound in August. The credit spread of the single-B universe tightened by over 100bps last month. While we navigated the volatile market with caution, we continued to be active in both the primary and secondary markets. We maintained our relatively defensive position and continued to monitor our exposure in China property. During the month, we continued to add to the industrial sector and highly liquid sovereign issues.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/179170076.pdfJuly, 2021
July was a very disappointing month for Asian credits, particularly for Chinese real estate high yield bonds. Single-B and lower-rated Chinese property bonds dramatically underperformed as the market continued to worry about the refinancing risk and the well-being of China Evergrande, a major real estate developer and issuer in the Asian bond market. For the month, investment grade credits were slightly up, while high yield bonds were down by more than 3%. We remained defensive and continued to trim our China property exposure, especially the high-beta ones. We rotated into the industrial sectors and also into highly liquid sovereign issues
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/176032465.pdfJune, 2021
In June, the portfolio’s AUD currency hedge was 97%. We will continue to monitor the AUD exposure and adjust our currency hedge as we see fit.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/175013852.pdfMay, 2021
Global markets remained range-bound in May, with the 10-year US treasury yield benchmark ending slightly lower for the month. In Asian credit markets, high yield outperformed the investment grade universe due to higher income. We continued to fine-tune our China property positions and deployed some capital into select industrial names. We expect to maintain the current allocations in the foreseeable future.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/173160895.pdfApril, 2021
April was relatively quiet. The benchmark 10-year US treasury yield reversed course, ending the month almost 12-basis points lower. As a reflection, the more rate-sensitive sovereign and quasi-sovereign bonds outperformed both high-yield and investment-grade corporate bonds. Tactically, we reduced our positions in selected high-beta Chinese property bonds and raised the cash level of the fund, while our overall portfolio duration remains short. We expect to maintain the current posture in the short to medium term.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/171484491.pdfDecember, 2020
Asian credits finished the year with a stable and supportive tone in December, with lower-rated credits outperforming the higher-quality ones. The U.S. Treasury return was between flat and slightly negative. In our portfolio, Chinese property names continued to post steady performance, and certain names in Indonesia and the Chinese industrial sector also added to performance. For the year, the majority of the Asian credit performance was predominantly from the massive U.S. Treasury rally. On a credit spread basis, it has only posted moderate performance.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/163707112.pdfasset_class: Fixed Income
asset_category: High Yield Credit
peer_benchmark: Fixed Income - High Yield Credit Index
broad_market_index: Global High Yield Credit Hdg Index
manager_contact_details: Array
ticker: MAQ0782AU
release_schedule: Monthly
commentary_block: Array
factsheet_url:
https://www.premiumasiafunds.com.au/funds/premium-asia-income-fund/
Updates & Reports
fund_features:
Premium Asia Income The Fund aims to generate regular income with some long-term capital growth. The Fund provides exposure to a concentrated portfolio of fixed interest securities issued by companies in Asia and the Middle East. The Fund may also invest in cash, money market instruments and derivatives including over-the counter participatory notes and foreign exchange contracts.
structure: Managed Fund