The Evergrande default and the China real estate crisis are currently causing 
around 10 billion US dollars in losses at the ten largest pension and 
investment funds specializing in Asia, with the largest Evergrande bond 
exposure of around 1.2 billion US dollars. Of these, US$7 billion have already 
been incurred in real terms and a further US$2 billion will be realized when 
insolvency is filed. A further US$158 billion in losses on Evergrande from CDS 
investments by international investors is expected.

A recent DMSA study analyzing the top ten Asia-focused pension and mutual funds 
with the largest exposure to Evergrande bonds shows:

Evergrande and general China exposure has led to losses of up to 21 percent 
this year in all 10 funds studied; across all 10 funds combined, losses total 
$7 billion. Current Evergrande bond prices are about a quarter per dollar 
(about 25 percent of 100 nominal) and, based on Fitch redemption rates, will 
fall to 5 percent per $100 upon insolvency. Therefore, a further correction of 
6 percent or $2 billion is expected.

"If Evergrande will be bankrupt, the above funds would lose $9 billion in total 
year-to-date. This does not take into account real estate companies that are 
still well valued and which could also be on the verge of insolvency. The 
funds' losses then exceed the $10 billion mark," explains DMSA senior analyst 
Dr. Marco Metzler. It also shows that with only $1.2 billion of reported 
official Evergrande bond exposure, the losses are significantly higher than the 
nominal bond exposure by a factor of 10. "The difference can only be explained 
by possible additional investments in other bonds from Chinese real estate 
developers and credit default swaps (CDS)," analyzes Dr. Metzler. According to 
a research report by investment bank Goldman Sachs, the market's CDS exposure 
to Evergrande is said to be around $158 billion. "This shows that extent of the 
spill-over effects of the Evergrande bankruptcy. In addition to the $23.7 
billion in bonds, another $158 billion would then be lost," Dr. Metzler 
summarized.

Valued at $55 trillion, the Chinese real estate market is twice the size of 
that in the United States. It generates 29 percent of China's gross domestic 
product, compared with 10 to 20 percent in other nations, and has been called 
the most important sector of the global economy. But with the mountain of debt 
from real estate developers like Evergrande and funds overweight in real estate 
bonds, many are now experiencing dramatic losses.

According to the information available, the Asian High Yield funds of Fidelity 
and UBS are the ones with the highest Evergrande exposure.

Name
Participation
Issued pcs. in %
Data delivery Fantasia

FIDELITY - ASIAN HIGH YIELD
215.056.305
0,91
30.06.2021
-
30.09.2021
 
UBS - Asian High Yield USD
171.924.000
0,73
30.09.2021
53.050.000
30.09.2021
 
Ashmore SICAV - Emerging Markets TR
166.656.000
0,70
30.09.2021
28.208.000
30.09.2021
 
Ashmore SICAV - Emerging Markets LC
140.016.000
0,50
30.09.2021
47.841.000
30.09.2021
 
iShares USD Asia High Yield Bond ETF
134.439.000
0,50
08.11.2021
2.300.000
08.11.2021
 
PIMCO Asia High Yield Bond Fund
111.300.000
0,47
30.06.2021
17.400.000
30.06.2021
 
BlackRock - Asian Tiger Bond
88.589.000
0,37
31.05.2021
38.535.000
31.05.2021
 
Fidelity - Global Multi Asset Income
76.007.640
0,32
31.08.2021
-
30.09.2021
 
Eastspring Investments - Asian Bond
58.950.000
0,25
30.09.2021
48.450.000
30.09.2021
 
AB FCP I - Global High Yield Portfolio
28.460.000
0,12
30.09.2021
-
30.09.2021

Participation
1.191.397.945

Fantasia Participation
235.784.000
 
Participation on Evergrande and Fantasia Bonds

Looking at the average ratings in the affected funds, the Fidelity Asian High 
Yield Fund has a weight of 34.2 percent invested in real estate with an average 
rating of BB. This has lost 17.3 percent in value this year. The UBS Asian High 
Yield Fund, with an average rating of BB-, holds 45.7 percent in real estate 
bonds. This has lost 20.8 percent in value this year.

"The top ten funds hold $1.2 billion in Evergrande bonds," said Dr. Marco 
Metzler. "However, there is another $236 million exposure to other real estate 
companies such as Fantasia, and it is quite clear that the funds under 
consideration are overweight the real estate sector. They hold up to 45 percent 
in real estate bonds, which may now be their undoing."

Name
Losses In % 2021
Participation Evergrande Bonds
AuM in Bio. $
Losses in Bio. $
 
FIDELITY FUNDS - ASIAN HIGH YIELD FUND
-17,27%
215.056.305
3,90
-0.79

UBS Lux Bond SICAV - Asian High Yield
-20,83%
171.924.000
2,97
-0.75
 
Ashmore SICAV - Emerging Markets TR
-11,24%
166.656.000
21,35
-2.67
 
Ashmore SICAV - Emerging Markets LC
-11,18%
140.016.000
3,33
-0.41
 
IShares USD Asia High Yield Bond Index
-15,50%
134.439.000
1,74
-0.31
 
PIMCO Asia High Yield Bond Fund
-12,83%
111.300.000
1,73
-0.25
 
BlackRock Global Funds- Asian Tiger Bond
-8,27%
88.589.000
5,25
-0.47
 
Fidelity Funds - Global Multi Asset Income
-3,93%
76.007.640
9,30
-0.38
 
Eastspring Investments - Asian Bond
-8,25%
58.950.000
3,60
-0.32
 
AB FCP I - Global High Yield Portfolio
-2,36%
28.460.000
27,05
-0.65
 
Participation Evergrande Bonds
1.191.397.945
 
Losses in Bio. $
-7.01
 
Losses of funds with largest Evergrande bond exposure

The losses incurred have already called for personnel consequences. The senior 
investment manager of UBS Asian High Yield has reportedly left the firm after 
suffering significant losses since the start of the year and holding 
substantial holdings in the Chinese real estate sector, including bonds issued 
by Evergrande. Singapore-based Ross Dilkes has left UBS Asset Management after 
starting there 16 years ago, according to a "Bloomberg" report. Dilkes is the 
senior manager of the Asian High Yield fund, which was launched about nine 
years ago. 

Treasury Secretary and ex-FED President Janet Yellen fears consequences for the 
global economy. She recently warned that Evergrande's and other Chinese 
difficulties in repaying billions of dollars in loans could have repercussions 
for the global economy. 

Fears that its collapse could drag down Chinese banks and shake the country's 
huge real estate market have roiled global financial markets and now Americans. 

The Federal Reserve warned of direct risks to the U.S. in its latest Financial 
Stability Report. Financial tensions in China could weigh on global financial 
markets by worsening risk sentiment, pose risks to global economic growth, and 
affect the United States.

Please find more information and the research report at www.dmsa-agentur.de.

About DMSA Deutsche Markt Screening Agentur GmbH:

DMSA Deutsche Markt Screening Agentur GmbH, is an independent data service that 
collects and evaluates market-relevant information on companies, products and 
services. DMSA sees itself as an advocate for consumers, private customers and 
intelligent investors. The claim: to always look at companies and providers, 
products and services through the eyes of the customers. The customers are the 
focus of DMSA's work. For them, important and decision-relevant information is 
bundled and presented as market screenings. The aim is to create more 
transparency for consumers when selecting products, investments and services.

Press contact: 
Inga Oldewurtel 
Press Officer 
oldewurtel@prio-pr.de 
+49 176 62 26 18 97 

Responsible for the content: 
Michael Ewy 
Managing Director
DMSA Deutsche Markt Screening Agentur GmbH 
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10439 Berlin
Germany

Source: DMSA Deutsche Markt Screening Agentur GmbH