Analysis-Malaysia scores record flows as bond investors favour Asia

Written by Johann Sherian, Johraf Dugra and Rai Wei

Singapore/Bangaluru (Reuters) -Investors who flee the United States find a haven in the stable and profitable Asian debt markets, where Malaysia leads the package as a destination for foreign funds.

Foreign ownership of government bonds from Indonesia to India rises, bringing the back winds of markets that are traditionally dominated by local players.

“We are in a very good environment for Asian investments,” said David Zhao, a strategy of the world’s Pacific global market in Invvisco. “The ingredients are present for Asia, for the emerging markets that are superior to.”

The greatest attractiveness is a mixture of cash dilution and appreciation of the currency that they first offer in four years, deposited by the policies of US President Donald Trump and weakening the dollar.

Malaysian bonds recorded their largest monthly flower flows since 2014 last month, about 3.15 billion dollars. India and Indonesia also got large flows.

Throughout Asia, inflation and politics rates decreased at its peak with the United States, Europe or Japan, where financial performance has undermined the value of long -term debts.

Increasing the wrong growth and reducing the rate expected to enhance the lock’s gravity in peak rates, with the possibility of capital estimation on bonds with low returns. The weakest dollar also gives investors to profit from the currency estimate.

“The origins of the emerging market will be emerging mainly when the prices of the United States decrease, and the US dollar is weakening,” said Shah Jahan Abu Thaher, head of the global markets of South Asia at Bank of America.

“In the past few years, the opposite has been … and now, from a stories, there is definitely some interest that will come back.”

Bond’s attractiveness

Data from regional organizational authorities and bond market societies showed that foreign investors have bought 34 billion dollars of Asian debt bonds so far this year – the largest amount in the first five months of the year since at least 2016.

Analysts said this is just the beginning of flows to these unable markets, and it is likely to continue as long as economies and monetary settings in this part of the world are isolated and more stable than advanced markets.

“We are witnessing this fixed benefit to income throughout the Board of Directors in the em and small countries – Thailand, the Philippines, Indonesia and India,” Soo Li, the head of the Asia South Markets at City Group.

She said that India was one of the most active markets for customers, due to a series of discounts in prices.