Fixed Income

With US monetary policy entering a new phase, Asian credit markets are attracting attention thanks to cleaner corporate balance sheets and an attractive yield profile.

Asian emerging market local bonds offer lower yields than Latin American or Eastern European peers, but the region's stability, reforms and shock resilience are boosting its appeal for global investors.

With the long-standing dominance of US funds questioned due to outflows, Asian markets including South Korea, China, and Taiwan narrowed the performance gap and attracted new interest on the back of strong rebounds.

High‑yielding carry trades and surplus‑backed currencies are drawing different institutional investors to Asia, as managers weigh how to balance cyclical opportunities with long‑term stability.

As bond–equity correlations shift unevenly across Asia, investors are rethinking how to structure portfolios.

With yields elevated, currencies stabilising and liquidity improving, Asian local currency bonds are drawing greater attention as investors diversify away from dollar assets.

After years of elevated bond–equity correlations, signs of decoupling are emerging in Asia. But the pattern is uneven, with inflation expectations, central bank credibility and market structures shaping whether bonds can reliably diversify portfolios again.

Despite rapid growth and rising institutional interest, Asia’s ETF industry remains fragmented and constrained by regulatory and retail barriers — leaving it far behind the US in scale and accessibility.

Despite fiscal strains in developed markets, Asian investors continue to favour sovereign debt. Managers say allocations remain stable, though yield dynamics and sector fundamentals show where flows could shift if preferences change.

US Treasuries now carry a visible fiscal risk premium, skewing comparisons with corporates. In Asia, healthier fiscal anchors keep spreads more grounded, according to investors.

Asian USD bonds have consistently shown lower volatility than global peers, a resilience supported by sovereign anchors, domestic investor bases, shorter duration profiles and growing intra‑regional linkages.

Global investors are reassessing their reliance on dollar-denominated assets as fiscal strains, tariffs and political uncertainty weigh on the currency, with Asian bonds emerging as a structural alternative.