Last December, when Guo Guangchang, founder of acquisitive China conglomerate Fosun, was detained for questioning by Beijing authorities, the value of the group’s bonds immediately fell.
So an executive at Kaisa, the less well-known developer also listed in Hong Kong, responded by loading up on Fosun bonds at a sharp discount. He had come to a conclusion that many would do well to remember: in China, political calculations must still be factored in to debt investment.
“I took the view that Mr Guo would have to be released quickly,” the Kaisa executive recalls, adding that he based his views on first-hand experience. Kaisa had been caught up in Beijing’s anti-corruption campaign in 2014. “After what happened to us, they wouldn’t want to go after something even bigger than us. The government learned from us.”