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September 23, 2021

HSBC, BlackRock raised holdings in China’s Evergrande despite crisis signs

By Amala Johney

Funds managed by HSBC and BlackRock reportedly increased their holdings in the crisis-struck Chinese developer Evergrande, despite concerns over its $300bn debt.

BlackRock purchased five different Evergrande dollar bonds through one of its high-yield funds in this August, Financial Times reported citing data by Morningstar.

The firm previously had holdings worth $18m in the developer.

The Morningstar data also shows that a high yield fund managed by HSBC also raised its stake in Evergrande by 38% since February this year.

Due to decreasing prices, the value of its total exposure at $31m came down during the period.

Blackrock refused to offer any comment on the news.

HSBC’s asset management unit told the publication that the firm ‘closely monitor developments in the real estate sector as with many sectors it in invest in.’

However, Swiss wealth management giant UBS took note of Evergrande’s volatility and subsequently warned its wealthy clients about the risk.

In June last year, UBS chief investment officer stuck Evergrande on the bank’s watchlist and the Evergrande securities were removed from rich clients’ portfolios.

UBS acquired Evergrande securities this year, according to Morningstar data. The size of the Evergrande debts held by the firm is not clear.

Evergrande, which is currently on the brink of a default, has two repayments due this month, according to various reports.

The firm is expected to pay some $84m on its bond this week while another repayment worth over $47m, for a different bond, is due on 29 September 2021.

Reports suggest that the China authorities are likely to step in for Evergrande’s rescue and save it from collapsing.

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