Complex Event Analysis - Report

Key Focus

China's rapidly expanding $15tn mainland bond market offers some tantalising prospects for pension funds and other institutional investors that have seen sources of income decline and disappear from their traditional hunting grounds in the US and Europe.But a thicket of legal, regulatory, and trading risks lies ahead for international investors, according to the IMF, which has warned that the worlds second-largest fixed income pool requires sweeping reforms to raise standards.Low liquidity and a shallow market present fundamental problems

Foreign investors do not have sufficient derivative tools to hedge against exchange rate risk, interest rate risk and credit risk, the IMF noted in a review of the market.Bond defaults by Chinese issuers were unknown before 2014.

Nor are foreign investors allowed to trade bond futures. Foreign investors do not have sufficient derivative tools to hedge against exchange rate risk, interest rate risk and credit risk, the IMF noted in a review of the market.Bond defaults by Chinese issuers were unknown before 2014

But the states willingness to bail out state-owned enterprises and local government financing vehicles has generated a deeply entrenched system of implicit guarantees for lenders, leading to excessive risk taking and capital misallocation.Calls for reforms face resistance, not least from lending banks which would be forced to increase their capital buffers against losses on bad loans.RecommendedAnalysisChinese business & financeChina's bond market shines as Treasuries turn treacherousThe default rate in China's bond market, which is much lower than other international markets, is expected to rise but how far is unclear

Chinese bond issuers pay for ratings themselves, a clear conflict of interest. China's rating industry needs to rebuild credibility, said the IMF.Further complicating matters is the fact that the oversight of rating agencies is split between different regulators depending on the type of bond issuer

Momentum supporting factors

(bond,china)

(bond,income)

(bond,trading)

Challenge supporting factors

(bond,investors)

(bond,imf)

(bond,risk)

(bond,interest)

(bond,income)

(bond,chinese)

(bond,trading)

(bond,thicket)

Work-in-progress supporting factors

(bond,risk)

(bond,china)

(bond,imf)

(bond,interest)

(bond,vehicles)

(bond,treacherousthe)

Complex Event Time Series Summary - REPORT

Time Period	Challenge	Momentum	WIP
Report	60.53	13.16	26.32

High Level Abstraction (HLA) combined

High Level Abstraction (HLA)	Report
(1) (bond,risk)	100.00
(2) (bond,imf)	92.73
(3) (bond,investors)	87.27
(4) (bond,china)	76.36
(5) (bond,interest)	40.00
(6) (bond,income)	27.27
(7) (bond,chinese)	10.91
(8) (bond,vehicles)	9.09
(9) (bond,trading)	9.09
(10) (bond,treacherousthe)	7.27
(11) (bond,thicket)	1.82

Complex Event Analysis - REPORT

Supporting narratives:

momentum (Read more)

This complicates trading strategies including curve trades and cash bonds against futures which help to enhance liquidity and price discovery in US fixed income markets.The vulnerability of China's internal bond market to adverse shocks is also greater because turnover tends to depend on whether the central bank is easing or tightening monetary policy
High Level Abstractions:

(bond,china)
(bond,income)

momentum (Read more)

US Treasury issuance is focused on specific maturities, such as 10- and 30-year bonds, known as key tenors. But China issues government bonds across a broad spread of key tenors. This complicates trading strategies including curve trades and cash bonds against futures which help to enhance liquidity and price discovery in US fixed income markets.The vulnerability of China's internal bond market to adverse shocks is also greater because turnover tends to depend on whether the central bank is easing or tightening monetary policy
High Level Abstractions:

(bond,trading)

challenge (Read more)

Nor are foreign investors allowed to trade bond futures. Foreign investors do not have sufficient derivative tools to hedge against exchange rate risk, interest rate risk and credit risk, the IMF noted in a review of the market.Bond defaults by Chinese issuers were unknown before 2014
High Level Abstractions:

(bond,risk)
(bond,interest)
(bond,investors)
Inferred entity relationships (4)
(bond,investors,schroders) [inferred]
(bond,investors,smr) [inferred]
(bond,interest,investors) [inferred]
(bond,investors,waste_management) [inferred]

challenge (Read more)

China's rapidly expanding $15tn mainland bond market offers some tantalising prospects for pension funds and other institutional investors that have seen sources of income decline and disappear from their traditional hunting grounds in the US and Europe.But a thicket of legal, regulatory, and trading risks lies ahead for international investors, according to the IMF, which has warned that the worlds second-largest fixed income pool requires sweeping reforms to raise standards.Low liquidity and a shallow market present fundamental problems
High Level Abstractions:

(bond,income)
(bond,investors)
(bond,thicket)
(bond,trading)
(bond,imf)
Inferred entity relationships (3)
(bond,investors,schroders) [inferred]
(bond,investors,smr) [inferred]
(bond,investors,waste_management) [inferred]

challenge (Read more)

Foreign investors do not have sufficient derivative tools to hedge against exchange rate risk, interest rate risk and credit risk, the IMF noted in a review of the market.Bond defaults by Chinese issuers were unknown before 2014.
High Level Abstractions:

(bond,chinese)
(bond,imf)

WIP (Read more)

But the states willingness to bail out state-owned enterprises and local government financing vehicles has generated a deeply entrenched system of implicit guarantees for lenders, leading to excessive risk taking and capital misallocation.Calls for reforms face resistance, not least from lending banks which would be forced to increase their capital buffers against losses on bad loans.RecommendedAnalysisChinese business & financeChina's bond market shines as Treasuries turn treacherousThe default rate in China's bond market, which is much lower than other international markets, is expected to rise but how far is unclear
High Level Abstractions:

(bond,risk)
(bond,china)
(bond,treacherousthe)
(bond,vehicles)

WIP (Read more)

Chinese bond issuers pay for ratings themselves, a clear conflict of interest. China's rating industry needs to rebuild credibility, said the IMF.Further complicating matters is the fact that the oversight of rating agencies is split between different regulators depending on the type of bond issuer
High Level Abstractions:

(bond,china)
(bond,imf)
(bond,interest)
Inferred entity relationships (1)
(bond,interest,investors) [inferred]

Target rule match count: 15.0 Challenge: 0.30 Momentum: 0.07 WIP: 0.13