Private credit might be less attractive than it was last year as investors rush into the market, but there are sweet spots to be found.
Henry Wong, former head of fixed income at BNP Paribas Asset Management, who has been with BEA Union since January, will manage the portfolio. He is upbeat that the shift in global economic power and the strength of regional balance sheets will help Asian currencies see through the immediate problems of inflation and possible recession in America or Europe.
Moreover, AsiaÆs bond pipeline is more robust than ever. There are more issuers issuing longer-term securities, and of higher credit quality. Most Asian governments are considered investment grade. Meanwhile the US dollar has depreciated by about 50% against most Asian currencies since 2002, and the US fiscal position continues to deteriorate. So with little reason to expect a sustained dollar rebound, Wong says it is natural for Asian investors to allocate back to this region.
Wong intends to keep his focus on high-grade sovereign credit and blue-chip issuers within Asia. He predicts the Chinese renminbi and the New Taiwan dollar will correlate more strongly, as economic relations improve; both units have appreciated by about 6% against the US dollar since Taiwan's presidential election in March. He also expects the Singapore dollar to correlate more tightly with currencies from Southeast Asia and India, and is hunting for gains from short-term interest-rate movements in these convergence plays.
Wong is staying away from some of AsiaÆs high-yield destinations. As net importers of energy, he says the Philippines and Indonesia look vulnerable to depreciation. He is under-weighing the former and giving a mixed outlook for the latter. Wong is also casting a grim outlook for Korea, which he believes will be another market to succumb to inflation.
The fund will be offered through branches of the Bank of East Asia. Minimum investment in the fund is $2,000 and the management fee is 0.75-0.85% a year.
Insto roundup: FWD files for ADR listing in New York; Nippon Wealth Life fully acquired by parent firm
Intrust Super chief executive to step down after merger; Aware acquires site for essential worker affordable housing; China bans cryptocurrency-related business activities; Hong Kong insure FWD filed for US listing of ADRs; Nippon Life acquires wealth life insurance from MassMutual; NPS to hire five investment managers to diversify portfolio; Malaysia to review Spacs framework; EPF reports $8 billion investment income; and more
Hesitancy aside, institutional investors eye Australia and Japan as promising geographies for private debt investments within Asia Pacific, with Greater China and Korea on the periphery.
While Asia still lags the global average, interest in sustainable projects is growing fast; the only thing needed now is the expertise to drive growth
Regulators keep their eyes open on tightening insurance industry by introducing more detailed risk management requirements, which could bring pressure on smaller players.