Live on Bloomberg TV

00:00We're talking to who the Fitch or Moody's the other day about this as well the fact that there is such an enormous cash piles and cash flows are quite resilient and many of these tech names. Are we expecting that credit profiles for these tech players to remain stable despite the de-listing risk. We do think that the credit profiles mean higher marginal decoration in them yet. But this is likely due to be Covid-19 lockdowns in China which would likely be carried out in revenue generations. However we do think that this company's credit profile is strong enough to actually give them a sufficient cushion to take to this de-listing with. OK. You have an outperform on Lenovo dollar bonds. Not so much as bullish on Alibaba 10 cent underperformed. JD And by doing what. What's the difference between these three for Lenovo. We like their company's in China tax fees. Given that not only the company has provided it has actually improved its credit profile in the latest earnings results. And we think that it will also benefit from China's digital infrastructure which we do like Alibaba said which is why we have a market fund recommendation that we do not invite. We do not have it in the fund recommendation because we do acknowledge it DAX like some yet that will be making a wins and FTSE listing this be a hit like Vista is from. I mean in the face of all this you are seeing companies or some of these tech players buying back a lot of their bonds or shares I think is about 10 billion of share repurchases this year. Are you expecting more and does that actually have any impact when it comes to free cash flow by when a company does a share buyback. It will likely affect cash holding off a company. So for instance Alibaba did mentioned that you would like to rent that Chevy for Keys program in a NIKKEI wanted to. Yes. And so they let you lot that these tech companies may actually increased ahead share buybacks. Understood. Okay. The the other thing I want to talk to you about. And just getting a little bit more into your report here. So assuming all of them get delisted let's look at the worst case scenario. And of course we're talking about stocks here. That might mean sometime into the future. You don't you no longer get S.E.C. filings. Do you think that will have an impact on those companies ability to raise future cash. And do you think that turns away some investors who might actually need to see as easy disclosures. Yes. So this was also one of the risks that we highlighted in our report. So even though we think that the impact of these delisting risks act that companies are now Covid it's manageable. But we do think that our long term risk such as a shrinking investor pool given that not all investors been allowed them to invest in none of these companies. And that would be a lack of FTSE disclosure which would reduce investor confidence. And they might also be keeping liquidity in an open listing that is starting at. So you're seeing value emerging in the tech sector and wonder is is it time to call a bottom on this. Yep. As I like that we do like we do like to know what the Chinese think hardware companies. And we also have we also like at companies such as Alibaba. And then as we think the switch has widened out to e attractive level when we say it's us read that text. Yes. As I said China. You read that corporate. Yes. But we think that secrets will only tighten when there are a few CAC at least they are looking at. So first of all when the Chinese Covid-19 knock down and said is us because if there is not a media a lot going on as you would get affects revenue generation NIKKEI would think that a preliminary agreement between the FTSE ISE Chinese authorities that helped to prop up we have to tighten the bonds bond spreads given debt. This is getting hit means risk to the company. And we also think that when you add more positive more details on what the Chinese come down they'll do.

No schedule data available.

CreditSights Stephanie Sim on China's Tech

CreditSights Analyst for Corporates, Stephanie Sim, discusses credit outlook for China's technology stocks. Sim thinks that it is possible for a preliminary agreement on delistings between China and US to come in soon. She speaks to David Ingles and Yvonne Man on "Bloomberg Markets: China Open". (Source: Bloomberg)

More From Bloomberg Markets China Open
All episodes and clips

Bloomberg Markets
"Bloomberg Markets" is focused on bringing you the most important global business and breaking markets news and information as it happens.
More episodes and clips