Asian bonds get the thumbs up from fund managers

Asian bonds get the thumbs up from fund managers

FUND managers have turned bullish on Asian bonds in the fourth quarter, in anticipation that Asian central banks will ease monetary policy.

An HSBC survey of 13 fund management houses found three in four overweight on Asian US-dollar issues, and 63 per cent overweight on Asian local currency bonds.

Compare this with the previous quarter, when just 38 per cent and 25 per cent respectively were given overweight calls.

Asian debt capital markets have heated up this year, relative to last year.

Asian issuers have raised US$580 billion nine months into this year, up from US$460 billion over the same period last year, said Thomson Reuters.

Paul Arrowsmith, head of retail banking and wealth management in HSBC Singapore, said: "For medium- to long-term investors, there are potential long-term opportunities. Resilient fundamentals and potential monetary easing in the region make Asian income-focused assets appealing to investors."

That said, uncertainty continues to weigh on the minds of these institutional investors.

Mr Arrowsmith noted that their investment calls have been largely unchanged from the previous quarter, with 50 per cent still holding a neutral view of equities, and 60 per cent doing the same for bonds.

But equities still attract more optimism.

Four in 10 managers surveyed were overweight in this asset class, compared with the two in 10 who were sanguine about bonds.

Mr Arrowsmith said: "With recent monetary easing actions by central banks, including the third round of quantitative easing in the US, bonds remain attractive particularly for yield-seeking investors.

"Having said that, equities have long-term appeal underscored by the attractive dividend yield pickup over bonds."

What was highly popular among those surveyed were high-yield bonds, with 90 per cent overweight, as the low interest-rate environment made the search for yield more acute, said HSBC.

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