Thursday 28 Mar 2024
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Yields on corporate bonds, especially Asian ones, remain attractive for 2015, according to Eastspring Investments.

At a Jan 13 media briefing, the company’s global strategist Robert Rountree said Eastspring is not worried about the US rate hikes as longer-dated corporate bonds seem to have discounted this prospect. “Nevertheless, one should brace for increased volatility as US rate hike fears wax and wane,” he added.

Rountree also said if bond volatility becomes an issue for investors, Asian equity dividends could provide a better risk adjusted source of income, given their exposure to growth.

Meanwhile, Eastspring’s chief investment officer Boon Peng Ooi said the yield pick-up of Asian corporate bonds is attractive compared to government bonds and even similarly rated US corporate bonds. “This differential should underpin demand from yield-seeking investors, particularly as global liquidity should remain supported by the ongoing quantitative easing policies of the European Central Bank and the Bank of Japan.”

According to Boon, any sentiment-driven market sell-offs could present opportunities to buy credits at better valuations. Meanwhile, Asian currencies, which are backed by either yield or improving fundamentals, seem to offer value, he noted. These currencies include the rupee and the rupiah.

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