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Asian bonds receive highest foreign funds in five months in January -Breaking

by Mike Robinson

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© Reuters. FILEPHOTO: A crowd of people wearing masks walks past a stock exchange board during the COVID-19 pandemic in Tokyo, Japan, January 25, 2022. REUTERS/Issei Kato

By Gaurav Dogra

(Reuters] – In January 2017, the most foreign inflow to emerging Asian bonds from China was five times greater than the previous month. Its inflow stemmed from some indications of economic recovery, which eased worries about central bank tightening.

International investors bought a net sum of $7.39 trillion in South Korean, Thai and Indian bonds, respectively, last month. This was their largest net purchase since August according to data from regulators and associations representing bond markets.

GRAPHIC-Monthly foreign investment flows for Asian bonds

https://fingfx.thomsonreuters.com/gfx/mkt/lgvdwxbgepo/Monthly%20foreign%20investment%20flows%20Asian%20bonds.jpg

According to data released last month, the South Korean economic growth was at its highest rate for 11 years. It will expand by the most in 2021. With a rising domestic population, Indonesia and Malaysia both showed improvement over the last quarter.

Jennifer Kusuma from ANZ, Asia rate strategist said that “Overall flow in January underscores the attractive risk/reward profile Asia local currency yield bond for global investors.”

Last month’s foreign investment in Thai bonds was $2.08 trillion. This is the largest amount of foreign currency since July 2014. Its growth and ease of COVID-19 restrictions boosted economic recovery hopes.[L1N2U1091]

South Korean, Malaysian, and Indian bonds attracted overseas capital of $3.05 Billion, $825 Million, and $698 M, respectively.

According to Duncan Tan (a strategist with DBS Bank), “in the current environment in which U.S. rate are rising but the U.S. Dollar isn’t particularly strong,” Asia bonds will outperform.

Over the past five months, outflows from Indonesian bonds eased to a low of $282 millions.

Eugene Leow from DBS Bank, a strategist said that “It’s likely too early to make an all-clear on EM/Asia govvies.”

The market continues to be affected by Fed normalization and geopolitical risk around Ukraine.

GRAPHIC- Holdings of foreign investors in Asian bonds

https://fingfx.thomsonreuters.com/gfx/mkt/klpykmrlypg/Foreign%20investors%20holdings%20in%20Asian%20bonds.jpg

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