Schroders believes the best approach to fixed income investing in China is to have a flexible approach.

China’s economy has performed well in the past year due to its ability to manage the Covid-19 crisis, delivering timely and effective monetary and fiscal stimulus measures. The country recorded an 18% year-on-year GDP growth in the first quarter of 2021 – setting a historic single quarter record, but with growth now normalising, can investors still find opportunities in China in the age of #TheZero?

David Rees, Economist, Schroders, told the audience at the Schroders’ flagship investment conference for clients across the Asia Pacific region that he believes what China is experiencing is a healthy slowdown in growth and that this presents opportunities for active investors. Angus Hui, Head of Asian & Emerging Markets Credit, Schroders, added that China’s fixed income market presents many interesting opportunities against the backdrop of very low global interest rates and ESG issues.

David Rees said: “Growth in China is going to be slower over the long term, but it will still be faster than other markets in the world. We expect China to be growing at around 5% per year over the next decade, and productivity growth will be key in achieving that. Building up the high technology sector should help with this, and this could also help raise the overall income level of the country and its income per capita over the long term.

Angus Hui said: “With the low interest rate environment, China’s opening of its bond market is timely and attractive for investors. The China onshore RMB-denominated bond market is now the second largest bond market in the world after the US, and its offshore USD-denominated bond market accounts for more than half of the total market share in Asia fixed income. The further gradual index inclusion of Chinese government bonds in international indices and the continued demand from foreign investors will help further support China bond markets which is well developed relative to most other emerging markets.”

“Chinese corporate bonds boast attractive yields and wider spreads with lower duration risks than other global credit markets. The investment grade market has delivered relatively steady performance over the last five years. In today’s historic low interest rate environment, this additional income and carry benefit could prove to be even more valuable for investors. We are also seeing some multinational corporations financing their capital requirement via the RMB-denominated bond markets, and these will offer additional benefits and diversification for investors as well.”

“Another point to note is that Chinese bonds have low correlation with other asset classes, which means they can offer diversification benefits. China’s economic and monetary policy cycles will not be perfectly synchronised with other parts of the world, but influenced by conditions within China. That ought to lead to lower correlations between Chinese bonds and other markets. But when assessing fixed income opportunities in China, take for example the real estate sector, the key is to have a forward-looking view on individual names and assess other factors such as their landbank, execution capabilities, access of other borrowing channels, and balance sheets quality.”

“Green bonds are the other area that investors may want to pay attention to, as it is aligned with the country’s sustainable development goals. We expect more Chinese green bond issuances to occur in both the onshore and offshore space, especially now that its standards have elevated much closer to international levels. For instance, green coal projects are no longer considered as green bonds in China anymore, and we expect more companies from the renewable and alternative energy sectors, as well as new economy and tech companies, to issues green bonds going forward.

Schroders believes the best approach to fixed income investing in China is to have a flexible approach that allows you to invest in both onshore and offshore markets. One of the key benefits with onshore is its diversification benefits, whilst offshore offers better trading liquidity and valuation, especially in high yield names.

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Martin Lennon

Infracapital, the infrastructure equity investment arm of M&G Plc, and AMP Capital announce that they have agreed the sale of their combined ownership interest in Adven, a leading provider of clean energy solutions across the Nordics and Baltics, to institutional investors advised by J.P. Morgan Asset Management.

Infracapital and AMP Capital have owned Adven since January 2016, during which time they have worked with the business to achieve a number of significant milestones, including:

Realising significant growth and delivering on the ambition to expand the business’ presence in the Swedish market, becoming the leading provider of outsourced clean energy in the region;

• Successfully entering the Latvian and Norwegian energy infrastructure markets;
• Making significant progress in delivering sustainable energy solutions to its customers, achieving improved GRESB scores and reducing carbon footprint per sold megawatt hour by 20%^[1] since 2016; and
• Strengthening of the management team and Board, including the recruitment of a new CEO, CFO, an independent Chairman and high quality non-executive directors.

Martin Lennon, Head of Infracapital, said: “We are proud of the significant growth of Adven under our ownership. In line with our ambition to invest in essential infrastructure to support both long-term economic growth and deliver positive societal impact we have leveraged our experience and expertise to transform the business into the leading provider of clean energy solutions to industrial clients in the Nordics. Alongside AMP Capital and Adven’s management team, we have worked together to establish a strong platform for Adven’s continued success, and we wish the new owners, the management team and employees every success in the future. We are confident that Adven will continue to play a critical role in reducing CO2 emissions across the Nordics and the Baltics.”

David Rees, Global Co-Head of Asset Management at AMP Capital, said: “Alongside Infracapital we have successfully driven Adven’s growth through active asset management, with bolt-on acquisitions including the acquisition of E.ON’s district heating business in Sweden, and organic growth into new markets, while refocussing its strategy on clean energy solutions to bring positive outcomes for business, people and the planet. In recent months, Adven has demonstrated its robustness, proving highly resilient to Covid-19. Our exit concludes a successful investment for our clients, and we wish the new owners continued success in driving the business forward.”

Matthew LeBlanc, Chief Investment Officer, Infrastructure Investments Group, J.P. Morgan Asset Management, said: “The institutional investors advised by J.P. Morgan Asset Management are delighted to invest in Adven, a platform that significantly enhances scale and capability in the region alongside our ownership of Värmevärden. Adven has a fantastic track record of growth, leadership in ESG and delivering customer centric solutions, all of which are driving the long term sustainable energy transition. We are excited about supporting Adven, its customers, employees and broader communities in delivering on these collective goals and exciting growth ambitions.”

Jyrki Vainionpää, CEO of Adven Group, said: “Adven’s vision is to become the best in the world in providing sustainable energy as a service with superior customer experience for industries and real estate. Adven is constantly seeking new growth avenues, collaborating with the major industrial and real estate customers, and attracting the best talent. Our mission is to find, build and run energy solutions of tomorrow that benefit business, people and the planet. We are very happy to have a leading infrastructure investor as our new owner. We would like to thank our current owners Infracapital and AMP Capital for their strong support on our joint journey so far and look forward in pushing our ambitious future agenda forward with our new owner.”

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Ms McBreen is part of the team that is responsible for asset management across AMP Capital’s European infrastructure assets and will report to David Rees, AMP Capital Head of Asset Management for Europe.

Ms McBreen joined AMP Capital on 1 July 2017 from UK Government Investments (UKGI), an associated body of HM Treasury, where she was Executive Director working on several portfolio assets including Network Rail, Highways England, NATS and Companies House. Prior to that, Ms McBreen spent 15 years at rolling stock lessor Alpha Trains and its predecessor company where she held a variety of roles across business development, procurement and corporate finance.

Ms Prnjatovic will lead the sourcing, onboarding and asset management of Australian and New Zealand energy infrastructure assets on behalf of AMP Capital’s investors. She will report to Michael Cummings, AMP Capital Head of Australia and New Zealand Infrastructure Equity Funds.

Ms Prnjatovic joins on 17 July 2017 from New South Wales Treasury where she was Commercial Director, successfully overseeing the A$34 billion privatisation of TransGrid, Ausgrid and Endeavour Energy. Previously, Ms Prnjatovic was Investment Manager at New South Wales Treasury, responsible for monitoring, reporting and influencing the performance of the state’s A$38 billion electricity sector.

AMP Capital Global Head of Infrastructure Equity Boe Pahari said: “I’m delighted to announce these two senior appointments to our Infrastructure Equity team in London and Sydney. It reflects a business that is going from strength to strength after the successful US$2.4 billion close of our global infrastructure platform at the end of last year and our deepening infrastructure investment capabilities in the energy sector.

“Niamh brings a wealth of asset management experience, particularly across the transport and energy sectors, and is a valuable addition to AMP Capital’s European asset management team. She has a proven track record driving business growth and deep expertise across multiple operations functions including strategy, finance and business development. Asset management is critical to the overall value we deliver to our investors and our focus remains on growing and enhancing our assets.

“Stasha’s appointment follows the recent acquisition of a major stake in Endeavour Energy on behalf of long-term client REST as part of the Advance Energy consortium, and she will be invaluable when it comes to our existing energy investments such as Powerco NZ and Evergen. Stasha’s extensive experience and in-depth understanding of the energy sector means she is well-credentialed to lead the management of AMP Capital’s energy assets for the benefit of our investors.”

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The revamp sees 14 new members across the Business Development, Risk Strategies and Strategic Accounts teams, and will significantly enhance Zurich’s strategic distribution support capabilities.

Having earlier announced the appointment of Dave Evans to the National Sales Manager role, Zurich confirmed a number of further appointments across all mainland states:

New South Wales Rhonda Morley and Mark Olivier join as Business Development Managers. Jessica Brady joins the Risk Strategy Specialist team, and Klytie Sheppard has been appointed to the Risk Strategic Accounts team, reporting to Nathan Taggart. Victoria Lauren Styles joins as a Business Development Manager.

Queensland Michelle Dolan, Peter Christopherson, Russell Townsend and Ryan Adair have joined the Business Development team, whilst Danielle Visser has been appointed to the Risk Strategy Specialist team.

South Australia Simon Betchley joins as a Business Development Manager.

Western Australia Aaron Boddy has been appointed as Regional Manager, with David Rees joining the new Risk Strategy Specialist team.

Life and Investments Head of Distribution Kristine Brooks said the new team would be instrumental in bringing Zurich’s expanded product and service proposition to market.

“The life insurance advice landscape is evolving rapidly, and advisers are looking for help in re-shaping their businesses to adapt to change and to turn it into opportunity.

“Innovative product solutions, efficiency enhancing technology and comprehensive educational programs are just some of the resources we have developed to facilitate this ‘future-proofing’.

“Adding to our award winning Business Development presence in every mainland state significantly strengthens our ability to support licensees and advisers in growing their practice and improving their own customer proposition.

“We’re delighted to be able to add so much high calibre talent to a team already acknowledged as being the best within the industry,” she said.

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As part of Zurich’s Blueprints program to support best practice in the advice profession, the national team will be responsible for the creation and presentation of life insurance content to support Zurich’s strategic partners. The team will also be responsible for the ongoing management of the Zurich Curriculum, a comprehensive program of technical and sales development content, delivered via webinars and workshops.

Joining the team from Macquarie Life will be Business Development Managers Jessica Brady (NSW) and Danielle Visser (QLD), and Zurich West Australian Regional Manager David Rees.

The team will also work closely with highly respected industry consultant and financial adviser, Bill Webster.
Head of Distribution for Zurich’s Life and Investments business, Kristine Brooks, said the establishment of the team would enable Zurich to build on its award winning licensee support proposition by increasing its capacity to develop bespoke content, and support licensees and advisers with relevant consulting services.

“As the life insurance advice landscape continues to evolve, so too are the content needs of licensees,” said Brooks.

“We are seeing an increased demand for specialised content, especially around business management, client engagement and ethics, as licensees seek to help their advisers future-proof their practices.”

“Zurich is already known for the quality and relevance of its content, underpinned by our comprehensive research program and our ongoing support of the AFA Adviser of the Year award which allows us unprecedented insights into the latest in best practice.

“This experienced team comprises a balance of technical experts and accomplished presenters, and allows us to be more proactive in bringing our insights to a much wider audience,” she said.

As a result of these changes, Zurich’s National Sales Strategies Manager Andy Marshall has left Zurich to explore new opportunities.

“Andy has been a valued member of the Zurich family for four years, and as well as being a highly respected presenter and passionate advocate of advice, became known as a thought leader on the role of technology in improving the client engagement experience.

“He will be missed, and we wish him well for the future,” said Brooks.

The team will report into recently appointed National Sales Manager, David Evans.

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