A TOP-PERFORMING fund manager in China is buying dollar bonds of the country’s developers after offloading them last year, betting that authorities will soon unleash further measures to support the sector.

Developer bonds yielding 10 to 20 percent offer value because investors turned overly pessimistic, according to Deng Sicong, a Beijing-based fund manager at China Asset Management Co.

Deng’s fund is the top performer of the past year among the 25 Qualified Domestic Institutional Investor products that give China’s domestic investors access to offshore securities.

Deng declined to give specifics on companies and the timing of his purchases, but is upbeat on the potential of loosened policy in areas like mortgage rates and homebuying regulations.

“We kept cutting our exposure to Chinese developers since early last year, but we are now cautiously increasing positions in their dollar bonds,” said Deng.

He sees more policy support given how local governments heavily rely on land sales to developers for their fiscal revenue.

No Chinese builder’s dollar bonds were among the fund’s top five holdings as of Sept. 30, according to an October disclosure. Then, developers’ debt fell sharply as worries about China Evergrande’s debt repayment abilities broadened and a number of firms defaulted.

China Evergrande was among the top 2020 holdings in Deng’s fund.

China Asset Management oversaw 587.6 billion yuan (US$92.3 billion) in non-money-market mutual funds as of Sept. 30. (SD-Agencies)