Asian bonds see the highest foreign buying in a year in June

19 Jul, 2020 02:40
source: Reuters

Singularity Financial Hong Kong July 19, 2020 – Asian bonds recorded their biggest foreign inflows in a year in June as a surge in global liquidity following stimulus measures unveiled by major central banks bolstered demand for regional assets.

Asian bonds received a combined net inflow of $6.45 billion last month, the highest since June 2019, data from regional banks and bond market associations in Indonesia, Malaysia, Thailand, South Korea and India showed.

Foreign investors bought $2.87 billion worth of South Korean bonds, the highest in the region. The country’s bonds have attracted inflows every month this year.

South Korea’s stronger current account position, lower fiscal deficit and better yields, compared to other countries with the same sovereign ratings, are the reasons behind inflows into its bonds, some analysts said.

Malaysian bonds also received $2.7 billion worth of foreign money last month, largely into government securities.

Foreign buying in Malaysian bonds in June “is in line with higher portfolio flows into emerging market debt as negative sentiment abated amid reopening optimism and carry-trade flows,” Julia Goh, a senior economist at UOB, said in a report.

At the end of last month, ratings agency S&P Global changed to negative its outlook on Malaysia, to reflect weaker fiscal metrics, growth outlook, and heightened policy uncertainty.