What’s going on here?
Investors are still keen on Asian bonds, but enthusiasm waned in September due to US rate uncertainty and a strong dollar.
What does this mean?
Asian bonds enjoyed foreign investments for the fifth consecutive month, yet September saw a dip. Investments in bonds across Indonesia, India, Malaysia, South Korea, and Thailand hit $4.99 billion, down from August’s $14.09 billion total. Why? A robust US dollar and climbing American bond yields made investors cautious, with the dollar index at 103.397 and 10-year US Treasuries yielding 4.12%. Maybank analysts suggest US elections could steer investor actions.
Why should I care?
For markets: Global status swings outcomes.
Investors funneled $2.76 billion into South Korean bonds, banking on expected index inclusions that could enhance inflows even amid high yields. Plus, India’s government bonds are poised for major status boosts, joining JPMorgan’s Government Bond Index in June and Bloomberg’s Index next January. These developments could spark more interest and stability in these markets despite current challenges.
The bigger picture: Benchmarking future bond appeal.
Upcoming US elections and monetary policies could reshape emerging market trends. South Korean and Indian bonds are on track to join key global indices by 2025, signaling a growing global influence. These inclusions could boost demand and cushion risks like volatile treasury yields, highlighting Asian markets’ rising significance in global portfolios.
