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More Foreign Buying of Emerging Asia Ex-China Bonds in August

Malaysian bonds lured $1.25 billion as foreign inflows last month, the highest since December, while Indonesian bonds obtained about $600 million and Indian bonds also received $483m

Man stands in front of an electronic board displaying stock information at a brokerage firm in Hangzhou
Hedge funds sold 70% of the Chinese stocks they bought in the first 5 days post the July 24 Politburo meeting on stimulus hopes. Photo: Reuters


Foreigners were net purchasers of emerging Asia ex-China bonds for a second successive month in August, but buying was measured over concern on a further rate hike by the US Federal Reserve.

Overseas investors bought a total of $1.05 billion worth of bonds in Indonesia, Thailand, Malaysia, South Korea and India last month, according to data from regulatory and bond market associations.

Foreigners bought $618 million as regional bonds in July, after disposing of a total $15.45 billion between March and June.

“The sustainability of the inflows will be challenged by growing external headwinds,” Khoon Goh, head of Asia research at ANZ, said in a report last week.

“The US Federal Reserve is set to continue tightening monetary policy aggressively, sending the USD and US yields higher, which tend to be negative for flows into Asia.”

The US 10-year Treasury yield on Monday hit its highest in more than a decade and the dollar strengthened due to soaring expectations that the Fed would deliver a hefty rate hike this week to tackle inflation.



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Malaysia, Indonesia, India See Inflows

Malaysian bonds lured $1.25 billion as foreign inflows last month, the highest since December, while Indonesian bonds obtained about $600 million.

Indian bonds also received $483 million on reports saying JPMorgan was in talks with investors over a possible inclusion in its emerging markets index.

Meanwhile, South Korean bonds faced outflows of $1.38 billion, the biggest monthly withdrawal by foreigners since December 2019, on worries over slowing semiconductor exports.

A Barclays report said foreign holdings as a percentage of total government bonds outstanding declined across Asia in August, with the exception of Malaysia and India.

The brokerage said structural long-term allocations should partially offset still-defensive non-resident demand for Asian bonds, “but risks are for larger outflows if global rates rise further.”


  • Reuters with additional editing by Jim Pollard





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Jim Pollard

Jim Pollard is an Australian journalist based in Thailand since 1999. He worked for News Ltd papers in Sydney, Perth, London and Melbourne before travelling through SE Asia in the late 90s. He was a senior editor at The Nation for 17+ years.


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