Chinese USD corporate credit spreads remain near record lows, despite a brewing trade war between China and the US after Trump enacted an additional 10% tariff on Chinese goods in March. Chinese credit markets are perhaps reassured by policy announcements in the Two Sessions, with the government setting a 5% growth target for 2025, similar to 2024. Fiscal support will be more forceful, with the deficit-to-GDP ratio target raised to 4% and up from 3% in 2024. Furthermore, the PBOC also indicated that it will cut interest rates and the RRR at an appropriate time to provide monetary support.

Support measures for real estate will also be enhanced. China's National Administration of Financial Regulation (NAFR) said that it will expand and improve real estate financing mechanisms and extend the whitelist of developments eligible to receive financing. This will ensure the timely handover of pre-sold housing. The regulator will also formulate new models of real estate development and promote sustainable development of the property market. Investors have taken the policy announcements from the Two Sessions positively. Our China real estate DACS spread index has now eased to its lowest since early 2023.

DBS Aggregate Credit Spread or DACS indices show the aggregate credit spread, weighted by market capitalization and modified duration, for Asian corporate USD-denominated straight bonds. The higher is the DACS, the higher is the additional yield that can be earned in credit, and the higher is the perception of credit risks in markets.

Our first visual shows the notional outstanding of bonds from five Asian economies that comprise the Asia ex-Japan (AXJ) DACS index. These five economies are China, Hong Kong, Korea, India and Indonesia.

The second visual shows the notional outstanding split into industry sectors for the aggregate AXJ DACS index, and DACS indices for each of the five economies. Individual economies can be selected via the dropdown.

Our last visual illustrates the DACS index readings over time for AXJ or an individual economy. It is also possible to drill into the constituent sectors of the DACS indices using the second dropdown. Such sectoral DACS indices are shown on an individual economy basis when data is sufficient, and on an aggregated AXJ basis when otherwise.