Global asset owners believe China fixed income will bring good returns in the next two years, despite tougher regulations and some high-profile companies getting into difficulties.
As a new round of monetary easing sets in, Asian bonds are coming into greater focus for their higher yields and diversification benefits. Arthur Lau, head of Asia ex Japan fixed income at PineBridge Investments, says to manage today’s market uncertainty active bond selection matters more than ever.
In partnership with PineBridge Investments
The Asian bond market offers refuge with higher yields and stable return but investors need to navigate idiosyncratic risks and the impact of policy and politics.
Asian bond market investors face challenging times, but interest rates, credit selection, and local currencies create opportunities for alpha, according to Manulife Asset Management.
Asian bonds posted strong returns last year, but face an uncertain environment given changing US policy and expected Federal Reserve rate rises. Still, they offer relatively high yields.
Following the shock exit of its regional head, the fund house outlines plans to build A-share research, boost Asian bond coverage, seek a WFOE licence in Shanghai and open an office in Singapore.
In a video interview, Jim Veneau, head of fixed income for Asia at Axa Investment Managers, outlines his expectations for regional bonds and the possibility of a Bond Connect scheme.
The firm will soon roll out a Dublin-domiciled Asian fixed income product. It also expects more Japanese money to flow offshore and sees Philippine bonds as particularly attractive now.
Asian fixed income has hit record levels of foreign ownership, but stickier offshore investors should preclude a 1997-style crash, says Western Asset's Lian Chia-Liang.
The fund house aims to capitalise on Japanese pension plans' growing interest in new investment types, including Asian fixed income and certain alternatives.
A project supported by the Asian Development Bank seeks to produce incremental integration to fixed-income markets through standardised documentation.
Global fund managers intend to go overweight Asian fixed income, according to a survey by HSBC. But sentiment on Asian equity is mixed.