Asian bonds attract hefty inflows on US rate outlook, strong exports
Aug 14 (Reuters) -Foreign investors were net buyers of Asian bonds for the third consecutive month in July, spurred by strong regional export growth and expectations of a September rate cut by the U.S. Federal Reserve.
Overseas investors purchased a net $7.91 billion worth of bonds in Indonesia, India, Malaysia, South Korea and Thailand in July, data from regulatory authorities and bond market associations showed, following an about $3.03 billion worth of net accumulations in the previous month.
"The macroeconomic fundamentals in Asia remain positive. This should attract more inflows, especially with the U.S. Federal Reserve on track to cut rates soon," said Khoon Goh, head of Asia research at ANZ.
Reports signalled that regional economies including China, South Korea and Taiwan witnessed higher volumes of exports in July.
Indonesian bonds attracted a significant $3 billion in July, marking their third consecutive month of net buying, largely driven by foreign investments in Bank Indonesia Rupiah Securities (SRBI).
Demand for Indian bonds soared with a net investment of $2.68 billion, the highest figure in five months, following the inclusion in JP Morgan's emerging market debt index .JPMEMBIGLBL on June 28.
Indian bonds are expected to gain monthly inflows of about $2 billion until they reach a weight of around 10% in the JPMorgan's index by March 2025.
Cross-border investors also poured $1.75 billion and $749 million, respectively, into Malaysia and Thai bonds, while they pulled a net $270 million out of South Korean bonds.
Financial markets experienced increased volatility in early August following a weaker-than-expected U.S. payrolls report and disappointing manufacturing data, heightening concerns about an economic slowdown.
A weekly employment report last week, however, showed a drop in unemployment claims.
"Last week's better-than-expected U.S. jobless claims data helped assuage market concerns. We believe that the U.S. recession fears are overblown," ANZ's Goh said.
"We expect the mix of steady labour market statistics along with cooling inflation to keep the hopes of a U.S. soft landing alive, which will help portfolio inflows into Asia."
Monthly foreign investment flows: Asian bonds https://tmsnrt.rs/3LnM7dv
Reporting by Gaurav Dogra and Patturaja Murugaboopathy in Bengaluru; Editing by Sherry Jacob-Phillips
Related Assets
Latest News
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.
