Asian bonds’ June foreign inflows are biggest in two years By Reuters

© Reuters. FILE PHOTO: An investor looks at an electronic board showing stock information at a brokerage house in Beijing, August 27, 2015. REUTERS/Jason Lee/File Photo

(Reuters) – Foreigners’ purchases of Asian bonds surged in June to the highest in two years, as a drop in U.S. bond yields spurred global investors to hunt for better returns amid a low yield environment worldwide.

Asia’s bond inflows last month presented a contrast with the outflow from its equity markets, which were hit by a resurgence of coronavirus infections, to cast doubt over the region’s economic outlook.

Overseas investors bought a net $10.2 billion worth of Asian bonds last month, in the 13th straight month of inflows, data from regulatory authorities and bond market associations showed.

Graphic: Foreign flows into Asian bonds:

dropped 11.3 basis points in June, on signs that the economic recovery from the pandemic could be slowing.

“Real yield differentials over U.S. Treasuries are favourable for a few markets in Asia,” OCBC analysts said in a note this month.

“This backdrop is conducive to foreign inflows in general.”

Foreigners purchased a net $8.3-billion worth of South Korean bonds, on expectations of a hike in its interest rates later this year.

The holdings of overseas investors in South Korean bonds was at 8.7% by the end of June, the highest since at least 2009, the data showed.

Graphic: Real yield of Asian bonds:

Graphic: Asia 10-year government bond yield spread over U.S. Treasury:

A Reuters poll showed 28 out of 32 analysts saw a rate hike in the fourth quarter, while another two saw an increase coming as early as August.

Indonesian and Thai bonds also attracted $1.4 billion and $1.3 billion respectively.

Indian and Malaysian bonds, on the other hand, faced outflows.

Khoon Goh, head of Asian research at ANZ, said he expected the volatility to persist as investors weigh incoming U.S. data against expectations of the timing of the Fed’s bond tapering.

“However, for Asia’s asset markets, we believe the taper will not cause a‘tantrum’ this time, unlike in 2013,” he said.

“Stricter virus containment measures will eventually pay off, along with efforts to speed up national vaccination campaigns.”

Graphic: Foreign investors’ holdings in Asian bonds:’%20holdings%20in%20Asian%20bonds.jpg

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

Most Related Links :
Business News Governmental News Finance News

Need Your Help Today. Your $1 can change life.

[charitable_donation_form campaign_id=57167]

Source link

Back to top button