In yet another blow for China’s technology sector, Beijing has laid out a new law concerning personal data protection that continues to send investors scurrying. Historically, as a less volatile investment than stocks, bonds are seeing an uptick in interest, with June having reported the highest surge in two years, according to Reuters.

China’s passage of the Personal Information Protection Law contains a lengthy set of rules concerning data collection, protection, and processing, CNBC reports. The final version has yet to be published, but the law was passed on Friday by China’s legislature.

Previous iterations of the law included stipulations regarding user consent for data collection, which could be rescinded at any time. The only way that a company could refuse services to someone who withheld their data was if it was necessary for that product or service to work.

The legislation is the latest in a string of regulatory crackdowns that continues to hit the technology sector, one of China’s most rapid-growing areas and that previously had very little regulation to govern it. The new law, coupled with the previously passed Data Security Law and Cybersecurity Law, reflects a government that is taking data regulation seriously.

“The release of the PIPL completes the trifecta of China’s foundational data governance regime, and will usher in a new age of data compliance for tech companies,” said Kendra Schaefer, Beijing-based partner at Trivium China consultancy.

Tencent, the company behind WeChat, a popular messaging app, spoke up Wednesday about impending regulations for the internet sector and warned that more would be coming.

Investing in Asian Bonds with KraneShares and Nikko

With unpredictable regulations continuing to come down in China, record outflows are being seeing in equity funds. Some investors are looking instead to the Chinese bond market, and the KraneShares Asia Pacific High Yield Bond ETF (KHYB) offers options for those wanting bond exposures to Asian countries outside of Japan.

Asian high yield bonds are currently offering, as of June, an average yield of 7.9%, in comparison to 4.6% in U.S. high-yield bonds.

The fund is actively managed by Nikko Asset Management Americas, Inc, one of Asia’s biggest asset managers and a company that formerly had a minority stake (30%) in ARK.

KHYB invests in high-yield fixed income securities, otherwise known as junk bonds, of any maturity and duration, and that are issued by corporate, quasi-sovereign, and sovereign issuers located within the Asia-Pacific region.

Nikko utilizes a top-down macro research approach in combination with bottom-up credit research to create the portfolio. The firm uses a proprietary process that includes an assessment of an issuer’s credit profile in combination with Nikko’s assessment of overall value and relative value of a security to its industry.

Issuers are defined as being located within a country or region if they have substantial ties with an Asiatic country or region. This includes if the security is organized under the laws of a country in the region, 50% of revenues or profits come from products or services within the country or region, half of its assets are located within the region, its primary trading market is in the region or country, it is headquartered in the region, or if it is a government agency or entity within the region.

The fund is non-diversified and can potentially be concentrated within a singular country or region, invest in other ETFs that invest in securities the fund would invest in itself, invest in derivative instruments such as swaps and futures, and can engage in securities lending.

KHYB is U.S.-denominated and as such carries no currency risk. It carries an expense ratio of 0.69%.

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