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Malaysia, China Government Bonds are Best War Hedges: DBS

Malaysia would marginally benefit from higher oil prices while China bonds would provide some defensive cover in portfolios, says DBS.


India setting the stage for bond index inclusion. Photo: Reuters.

Malaysia and China government bonds provide the best hedges against the Russia-Ukraine conflict, says Singapore’s DBS Bank.

As the only Asian economy with positive oil and gas trade balances, Malaysia would marginally benefit from higher oil prices via higher terms of trade, said analysts led by rates strategist Duncan Tan in a note today.

Though foreign ownership of Malaysia government bonds is high at about 25%, a significant portion of foreign holdings is held by foreign central banks and foreign governments, which is expected to be more sticky and less susceptible to outflows around risk aversion, they said.

China bonds would provide some defensive cover in portfolios, as China’s strong balance of payments profile offers some safe-haven characteristics to China bonds, they said.

  • By Kevin Hamlin

 

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Kevin Hamlin

Kevin Hamlin is a financial journalist with more than 40 years of experience covering Asia. Before joining Asia Financial, Kevin worked for Bloomberg News, spending 12 years as Senior China Economy Reporter in Beijing. Prior to that, he was Asia Bureau Chief of Institutional Investor for ten years.

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