International bond investors are raising their asset allocations to Asia, increasing their exposure to the region’s credits and preparing to augment their portfolios with bank capital issues, green bonds and infrastructure financings.
This is among the key findings of the second HSBC and S&P Global Ratings-sponsored Asian Bond Investor Survey, conducted in late August and early September by East & Partners Asia, a leading specialist market research and consulting firm.
For much more insight and analysis, visit our dedicated Asian Bond Investor Survey microsite.
Through extensive one-on-one interviews, the survey revealed that as many as 77% of 152 asset managers in Asia-Pacific, Europe and North America, with funds under management averaging US$3.73 billion, intend to add to their holdings of Asian fixed income. This is slightly more than in the inaugural survey six months ago.
“Global and regional investors are clearly raising the weightings given to Asian bonds in their portfolios, reflecting the attractiveness of the asset class,” said Alexi Chan, global co-head of debt capital markets at HSBC. “The regional investor base is also shifting, to include much greater participation from institutional money managers and insurance companies, alongside banks and private wealth.”
Other issues covered by the extensive survey include the importance of public credit ratings and independent research on individual securities, heightened geopolitical instability in Europe and the growth of alternative bond structures, such as green bonds and panda bonds.
“Bond default levels have risen and markets are vulnerable to event-shocks, but the overwhelming demand for yield will continue to win the day,” said Matt Bosrock, managing director, global head of developing markets at S&P Global Ratings. “Access to independent credit analysis is a critical tool to ensure dispassionate risk assessment.”