Investor interest in East Asian government bonds doubled in September

Foreign investors bought the bonds of the governments of five East Asian countries for more than $1 billion during September. It goes so more than double the volume compared to Aug. Lenders are being dragged into Asia by a vision of higher yield and economic recovery of economies there.

Growing demand for bonds and decreasing demand for stocks in the US

Foreign investors bought the bonds of the governments of five East Asian countries for more than $1 billion during September. It goes so more than double the volume compared to Aug. Lenders are being dragged into Asia by a vision of higher yield and economic recovery of economies there.

US$1.26 billion went from abroad to the government bonds of Indonesia, Malaysia, Thailand, South Korea and India. This represents a year-on-month increase of 157 per cent. Last year, however, $2.13 billion wandered in that direction.

According to analysts, the influx can be explained by a change in the portfolio structure of foreign investors who focus on the East Asian region. Indeed, during September there was a net outflow of investment in equities in these countries amounting to around $6.5 billion. Thus, foreign investors seem to now favour government bonds, for which they see a more acceptable yield-risk-liquidity ratio.

The largest portion of September’s net inflows went into Thai government bonds, at over $800m. About 300 million lower volume then found placement in Indian bonds, Malaysia and South Korea then saw a virtually balanced balance of inflows and outflows of investment in government bonds. Only on Indonesian bonds has there been more net outflows.

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