China State Fund Moves to Cut Exposure to Weak LGFVs

The video discusses the increasing pressure on Local Government Financing Vehicles (LGFVs) in China, driven by economic slowdown and property market downturns. The National Social Security Fund is urging fund managers to reassess their investments in risky LGFV bonds. Despite no defaults yet, investor risk aversion is rising. The Chinese government is expected to prevent widespread defaults but aims to instill market discipline. State support mechanisms are typically mobilized, but a cautious approach is being adopted due to economic challenges and reduced revenue from land sales.

What actions have the China state pension funds taken regarding LGFVs?

What are the concerns regarding the LGFV sector mentioned in the text?

How has the COVID outbreak affected local government financing?

What implications does the increase in yield of LGFV bonds have for investors?

What does the text suggest about the future of defaults in the LGFV sector?