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A High-yield Power House for All Seasons


A HIGH-YIELD POWER HOUSE FOR ALL SEASONS

Raymond-Gui

Raymond Gui, CFA
Co-CIO and
Senior Portfolio Manager
Income Partners Asset
Management (HK) Limited

Investors’ appetite for high-yield credits raged unabated in 2017. Amid Asia’s yield-chasing atmosphere, Income Partners won this year’s House Award in High-Yield Fixed Income, among other awards, and took away the grand titles of Provider of the Year – Onshore and Best Fixed Income House. However, these wins have not made Raymond Gui, CFA, Co-CIO and Senior Portfolio Manager, complacent – perhaps a trait developed from years of plowing the inherently volatile high-yield space, where profits can easily evaporate if not closely guarded. He shed light on where opportunities may emerge next in Asia’s high-yield landscape.

BENCHMARK (BM): The Asian high-yield market has grown rapidly in the past two decades. As a pioneer in this market, can you tell us what the most drastic changes were in term of issuers, product offerings, and investor preference?
Raymond Gui (RG): Certainly. There have been two major changes in the USD denominated Asian high-yield market over the past five years. First, there was a surge in the number of active Chinese high-yield issuers in the offshore USD bond market. As these onshore companies expand overseas, more of them are testing the waters of the offshore bond market as an alternative funding channel. As of today, Chinese high-yield issues account for about half of the USD-denominated Asian high-yield market. This trend is broadening the China high-yield universe, thus creating more investment opportunities for bottom-up credit investors like us.
Second, thanks to the rapid growth of Asia’s high-net-worth population over the past decade, Asian investors now dominate the Asian high-yield market, accounting for around 80% of its investor base. Since Asian investors generally have a deeper knowledge of local companies and trade less frequently, the Asian high-yield market has seen a marked decrease in volatility since 2014.
BM: Following the Fed’s December rate hike, Malaysia’s central bank also raised its rate toward the end of January. Do you expect other Asian central banks to follow suit? And how will the tightening bias affect your strategy?
RG: This is a question occupying the minds of high-yield investors. We haven’t ruled out the possibility of more Asian central banks following in the Fed’s footsteps and raising rates this year. If investors’ worries about rising interest rates are not contained, they could develop into a major risk in the Asian high-yield market.
The other risk factor we anticipate is the progressively tighter valuation of Asian high yield bonds, given that the valuations of lower-rated bonds already appear stretched outside of As ia. That’s why we have shortened the duration of our high-yield strategies to be more defensively positioned this year.
BM: Given your significant exposure to China’s fixed income, what are the implications of China’s bond market liberalization on your investment thesis?
RG: We’re glad to witness the opening of China’s onshore bond market. Since last year, participation rules in the onshore market have become increasingly relaxed, giving rise to attractive investment opportunities for our Asian credit strategies.
China’s onshore RMB-denominated bond market is the third-largest in the world, next to the bond markets in the US and Japan. Its sheer size dwarfs that of the offshore, USD-denominated Asian credit market. The capitalization of the onshore market has surpassed US$11 trillion, of which over US$2 trillion is accounted for by implied high-yield bonds. The substantial scale means that across all our Asian credit strategies, China’s onshore bonds have become an increasingly important part of our portfolio allocation.
BM: Your consistent outperformance, even during times of market turmoil, is widely recognized by peers. Much of this success is attributable to your disciplined portfolio monitoring and risk management. How can your disciplined approach continue to create value in the prevailing bullish environment?
RG: Our disciplined approach to portfolio management is based on 25 years of experience in the Asian credit market. It is a combination of flexible, top-down macro allocation and prudent, bottom-up credit selection. Over the medium term, we have successfully achieved consistent outperformance while keeping volatility below average because we have tended to attain a return on par with the market when investors’ sentiment is bullish and because we have generally had less drawdown than other market players in bearish environments.
Our investment philosophy also emphasizes downside protection. When bond valuations spike to excessive territory and investors become overly optimistic, we tend to shift our focus to more defensive sectors. This strategy gives us more flexibility to buy bonds trading at lower valuations, right before market corrections set in.BM

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全天候高收益巨匠

Raymond-Gui

聯席投資總監及
高級投資組合經理桂林
弘收投資

2017 年,投資者對高效益信貸的胃口不減。於亞洲一片熱捧高收益投資工具的環境下,弘收投資悉數贏出多個獎項,除摘下本年高收益固定收入-基金公司大獎,更榮膺兩項重頭大項,包括年度本土基金公司大獎及最佳固定收入基金公司大獎。雖然勇奪殊榮,但弘收投資聯席投資總監及高級投資組合經理桂林卻未敢言滿。或者,多年來於高收益市場見慣高低起跌的他,深明積極管理投資組合的重要性,即是多年來累積了可觀的回報也有機會隨時一閃即逝。他更藉此大談亞洲高效益市場的未來投資機遇。

《指標》:亞洲的高息固定收益市場於近二十年發展迅速,作為市場先驅,可否談談發行商、產品供應及投資者喜好的最明顯轉變?
桂林:當然可以。以美元計價的亞洲高息固定收益市場,於過去五年有兩大轉變。首先,內地高收益債券發行商的數字顯著增加,主要源於本土公司積極拓展海外市場,當中有不少公司更於離岸美元債券市場一試水溫,作為另類注資渠道。時至今天,於內地發行的高收益產品,為數已佔以美元計價的亞洲高收益市場近半。此趨勢正在引領內地的高收益市場,為投資者創造不少機遇。
此外,有賴亞洲的高淨值人口於過去十年不斷上升,亞洲投資者目前正壟斷同區的高收益固定收入市場,佔總投資者八成。鑑於亞洲投資者普遍對同區公司較為熟悉,他們的成交次數亦未見活躍。事實上,於2014年起,亞洲高息固定收益市場的交投量更明顯有倒退的跡象。
《指標》:隨著聯儲局於12 月宣布加息,馬來西亞的央行也於一月底將利率調高。你會否期望其他亞洲央行跟隨?於收緊政策的大氣侯下,可會影響你的投資策略?
桂林:不少高息固定收益投資者正為這個問題而大傷腦筋。我們不能排除更多亞洲央行會跟隨聯儲局加息。如投資者憂慮利率無止境地調高,可能會為亞洲高收益市場構成重大風險。
我們預計其他風險因素,還包括亞洲高收益固定收入市場的估值逐漸收緊。事實上,不少評級較低的債券之估值,早已於亞洲市場以外偏軟。正因如此,我們今年已採取穩守策略,縮短了高收益固定收入策略的時間。
《指標》:鑑於你在內地市場投資固定收益的比率不輕,內地債券市場自由化對你的投資帶來甚麼啟示?
桂林:我們喜見內地開放本土債券市場,於去年開始,參與本土市場的限制進一步放寬,為我們的亞洲信貸策略製造更多具吸引力的機會。
內地本土人民幣計值的債券市場,目前於世界排行第三,僅次於美國及日本。市場規模之龐大,令以美元計值的亞洲信貸市場比了下去。此外,本土市場的總資產值達11萬億美元,當中有兩萬億美元為高收益債券。就亞洲信貸策略而言,內地發行的本土債券,於我們投資組合中的比重越見提升。
《指標》:雖然市況波動,你的表現依然出眾,備受業界推崇。你的致勝之道在於嚴謹的投資組合監控及風險管理。於利好的市場氣氛下,你如何把持方針創造利潤?
桂林:嚴謹的投資組合管理態度,乃建基於亞洲信貸市場的25 年經驗。這靈活揉合了自上而下的宏觀分配及自下而上的信貸選擇。就中期投資而言,我們成功表現優於大市之餘,亦將波幅保持低水平。於市場樂觀時,我們爭取將投資組合的回報率與市場掛鈎,於市場看淡時,通常比其他投資者有較少出現虧損。
團隊的投資哲學,同樣着重下行保護。當債券的估值過高,市場出現過度冗奮的跡象,我們會轉移投資至較保守性的行業。此策略可於市場出現調整前,更靈活地購入估值較低的債券。BM

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