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Delayed decarbonisation pledge buoys industrial bonds

(ATF) Chinese non-sovereign bonds resumed their rally Thursday propelled by the debt of industrial companies as investors judged recent pledges to delay decarbonisation of China to 2060 as beneficial to miners and power generators. 

The benchmark ATF China Bond 50 Index, and the ALLINDEX Corporate, Financials, Enterprise and Local Government sub-indexes climbed 0.01%.

President Xi Jinping to the United Nations annual gathering that China would be carbon neutral within 40 years, phasing out coal, oil and gas power generation. Many other countries have pledges to be greenhouse-gas free by 2050.

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“China will scale up its intended nationally determined contributions [under the Paris climate agreement] by adopting more vigorous policies and measures,” Xi said in an online address, calling for a”green recovery” in the world’s largest emitter of greenhouse gases.

The ATF China Bond 50 Index climbed 0.01%.

Datong Coal Mine Group rose 0.02% and Jizhong Energy Energy Group climbed 0.02%. The bonds of the Government of Guizhou saw their yields surge on concern that Xi’s green pledges would harm the heavy-industry and mining region’s longer-term economic prospects.    

China’s non-sovereign bonds have fallen from record highs in the spring as first the coronavirus downturn and then People’s Bank of China reluctance to extend bond-boosting monetary stimulus deterred international investors.

They have staged a moderate two-week rally amid speculation the central bank may be willing to loosen policy as signs indicate China’s recovery may be more fragile than expected and as a renewed surge of coronavirus infections in the West threaten to further deepen the global recession.

Mark McCord

Mark McCord is a financial journalist with more than three decades experience writing and editing at global news wires including Bloomberg and AFP, as well as daily newspapers in Hong Kong, Sydney and Melbourne. He has covered some of the biggest breaking news events in recent years including the Enron scandal, the New York terrorist attacks and the Iraq War. He is based in the UK. You can tweet to Mark at @MarkMcC64371550.

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