The Dutch pension asset manager's Asia Pacific head of real estate says his team has just had one of its busiest years ever and that 2021 is looking similarly promising.
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.
Mega players Nippon Life and Dai-ichi Life are looking for opportunities in higher-yield single-A US corporate bonds, which offer more appealing yields than stagnant domestic offerings.
The “lower for longer” monetary policy and stimulus packages, coupled with the rolling out of vaccine programmes favorably support real estate investing in the region, with offices and data centres presenting forward-looking opportunities.
As US fixed income default rates rose and yields fell during the pandemic, are Asian bonds, which have had more stable yields through 2020, looking more attractive?
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