Contagion could plague E Asia’s bond markets

The region’s debt capital markets could be vulnerable to contagion effects due to shift in global risk sentiment, says the Asian Development Bank.

Emerging East Asian bond markets could be hit by contagion from economies more vulnerable to the current emerging market turmoil if the situation in financial markets worsens, according to the Asian Development Bank.

The region has remained relatively stable in spite of the turmoil impacting other emerging markets globally because of its robust economic fundamentals, combined with a reliance on mainly local currency financing, the ADB said in a recent report.

Additionally, investors have been distinguishing between stronger and weaker markets based on country-specific economic vulnerabilities and have not been treating all emerging economies as a homogeneous group, notes ADB.

However, East...

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