Michael Li, a China-focused high-yield bond fund manager based in Hong Kong (who prefers not to speak under his real name), is struggling to attract new investment even though he has outperformed the market by a big margin.

“My portfolio is down 12 per cent, while the benchmark is down 40 per cent,” says Li, comparing his year-to-date performance with an index that tracks hundreds of dollar bonds issued by Chinese companies. “How can I tell my client, ‘Do you want to buy a fund that loses money a little bit less than the others?’ I have no story to tell.”

This downturn follows a slump in China’s offshore property bonds, which make up the bulk of the country’s once-lucrative dollar-denominated high-yield debt. They suffered as Beijing’s crackdown on property speculation in the second half of last year prompted dozens of local developers to default on interest and principal payments.