Global demand jumps for emerging Asia bonds on rate-cut bets, FX
[HONG KONG] Global investors are extending their purchases of sovereign bonds in emerging Asia on rate-cut wagers and stronger local currencies.
Foreign funds bought US$2.9 billion in Malaysia conventional government bonds in May, according to Bank Negara Malaysia's latest data, the largest monthly inflow since October 2013. Their purchase of a net US$652 million of listed bonds in South Korea on Jun 5, marked the longest buying streak in more than two years, according to Financial Supervisory Service data.
The inflows came as most emerging-Asian currencies strengthened this quarter, buoyed by an extended decline in the US dollar due to waning US exceptionalism and de-US dollarisation concerns. Growing expectations of lower borrowing costs in the region are also aiding bond sales, with issuers racing to secure financing ahead of any further wobbles in global markets.
Traders are increasingly betting that Malaysia, South-east Asia's last holdout against interest rate cuts, will finally pivot to boost its economic growth amid trade uncertainties. The Bank of Korea cut benchmark rates by 25 basis points at May-end, while signalling more policy easing as US trade tariffs hit growth.
Global investors have also poured US$1.7 billion and US$2.1 billion, respectively, into Thailand and Indonesian bonds since April, putting them on track for their largest inflows in at least three quarters. The demand has driven sovereign yields lower, with Thailand's 10-year benchmark falling to the lowest in nearly four years, while the similar Indonesia note is hovering close to a low in November.
In South Korea, clarity over the political landscape is also lifting the prospect for the country's assets after months of leadership vacuum. This, in tandem with the forthcoming addition into FTSE Russell's World government Bond Index are buoying demand despite lingering concerns over additional debt supply to fund President Lee Jae-myung's fiscal spending plans.
The benchmark Kospi Index climbed almost 2 per cent on Monday (Jun 9), leading gains in Asia, while Malaysia's main stock index rose by as much as 0.3 per cent. Global trade optimism was buoyed on Monday as top trade officials from US and China are set to hold fresh talks in London. BLOOMBERG
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Business Times
an hour ago
- Business Times
US-China trade talks in London hang over markets
[LONDON] US-China trade talks in London held markets' attention on Monday (Jun 9), with Asian stocks rising, Wall Street mixed and Europe dipping. The London negotiations, following on from a first round in Geneva last month, aim to quell renewed tariff tensions between Washington and Beijing. New York's Dow and S&P 500 indices were lower, while the tech-heavy Nasdaq rose slightly in early trading. Asian shares closed up on hopes of a deal, and catching up with Wall Street from Friday, when US jobs data suggested the American economy was doing well, for now. The US dollar, however, was largely unmoved, with persistent fears of higher US inflation in the pipeline from Trump's generalised tariffs weighing on it. London, Paris and Frankfurt indices were all lower. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up While the US economy was showing resilience, official data on Monday showed China's exports to the US last month grew at a slower pace than expected, even as they picked up to the EU and Asia. The US-China talks took place following a call between US President Donald Trump and Chinese President Xi Jinping last Thursday. They sought a de-escalation after each had accused the other of violating terms of a tariffs reprieve struck in Geneva in mid-May. The US side in London on Monday was being led by Treasury Secretary Scott Bessent, Commerce Secretary Howard Lutnick and Trade Representative Jamieson Greer, while Vice Premier He Lifeng headed the Chinese team. Their meeting was helped by news that Beijing on Saturday approved some applications for rare-earth exports, while US aviation giant Boeing is to start sending commercial jets to China for the first time since April. Easing China's export controls on rare-earths was key for Washington, 'while China wants the US to rethink immigration curbs on students, restrictions on access to advanced technology including microchips, and to make it easier for Chinese tech providers to access US consumers,' said Kathleen Brooks, research director at XTB. 'The outcome of these discussions will be crucial for market sentiment,' she said. The US dollar's weakness came as economists warned that Trump's tariffs on most of the world could reignite inflation, and as the US Federal Reserve weighs whether to lower interest rates. 'The May minutes and recent comments by several (policy board) members... suggest the Fed is highly attentive to the risk that tariffs will lead to a persistent inflation shock,' wrote analysts at Bank of America. In corporate news, entertainment giant Warner Bros Discovery announced plans to split into two publicly traded companies, sending its share price higher by more than 9 per cent. One would be a Streaming and Studios company covering film and TV production and catalogues, and the other a Global Network company with television brands including CNN and Discovery, and free-to-air channels in Europe. US semiconductor maker Qualcomm also announced it was buying a UK firm, Alphawave, for US$2.4 billion as demand for database infrastructure heated up from demand in the AI sector. Alphawave shares in London jumped more than 22 per cent on the news. Qualcomm's shares rose three per cent in New York. AFP
Business Times
3 hours ago
- Business Times
Asia healthcare assets risk overvaluation as private investors scoop them up
[SINGAPORE] As private equity (PE) investors pour money into Asian healthcare, some observers are concerned that this sector could soon overheat. Some recent deals this year include KKR's US$400 million purchase of a 54 per cent stake in India's Healthcare Global Enterprises in February. In Singapore, another American PE firm TPG took Catalist-listed nursing operator Econ Healthcare private in a deal worth nearly S$88 million. When the proposed transaction was announced in February, the offer price represented a 20 per cent premium to Econ's last traded share price on Jan 14. 'We are not the only ones to see the opportunity of healthcare in Asia, and, as a consequence, valuations can be high,' Abrar Mir, co-founder and managing partner of healthcare-focused PE firm Quadria Capital, told The Business Times. Other factors driving investors to the healthcare sector – perceived as defensive, and so able to withstand the ups and downs of economic cycles – is the ongoing macroeconomic uncertainty and volatility in global financial markets. This is particularly so in Asia, where investors have been diversifying away from China in the last few years, to avoid being caught in the cross hairs of the nation's tensions with the United States. As PE firms and their investors focus on acquiring companies independent of China, more deals have been transacted in Japan, South Korea and India, where the demand for healthcare and related services is strong and largely unaffected by tariffs. 'Japan has always been a stable healthcare market, and particularly because of (its) demographics and medical needs,' said David Braga Malta, thematic health principal at Pictet Alternative Advisors, to BT. 'We saw some of the mid-sized Japanese pharma companies being very acquisitive in the recent months and years... And of course, we saw the boom in the IPO (initial public offering) markets in India last year.' BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up Asia's appeal even drew European PE investors to buy South Korean assets for the first time in 2024, he added. Last September, France's Archimed spent US$742 million buying Jeisys Medical, a South Korean developer of aesthetic medicine devices. Like shopping in Louis Vuitton 'One of the key things that I always say to my investors is that... investing in healthcare in Asia is like shopping in Louis Vuitton. So, as an investor, we have to navigate that, be careful not to overpay,' said Quadria Capital's Mir. According to a Bain & Co report, global PE deal value in the sector surged last year to an estimated US$115 billion – the second highest on record. Bain added that PE firms continue to invest in healthcare in the Asia-Pacific, where deal values have been steadily rising since 2016. Industry participants named India as the country attracting the most number of healthcare PE investors. An ageing population, rising incidence of chronic disease and growing awareness of preventive care, combined with the opening up of its insurance market to foreign investment, are making India stand out. Bain estimated that the country made up 26 per cent of the 62 deals transacted in the Asia-Pacific last year. PwC said its health industries practice in India hit a double-digit compound annual growth rate in the past few years as well. But Ling Tok Hong, deals and private equity leader at PwC, cautioned that 'this continued focus on the India market could make it more susceptible to overvaluation if investors are not cautious'. South-east Asia's healthcare sector is also attracting PE investors, leading to 'unprecedented valuations' of Ebitda multiples in their 20s, noted Ling. He was referring to earnings before interest, taxes, depreciation and amortisation. Room for growth; returns still strong Despite the rising valuations in Asia's healthcare sector, market participants point out that there is still room for growth, a key factor backing the higher valuations in the first place. The sector offers attractive long-term growth prospects as the supply of quality healthcare assets in the region is not growing quickly enough to meet demand. In markets such as South-east Asia, 'the number of large, institutionally ready platforms is still limited. This scarcity has helped sustain high entry multiples in recent years', said Alex Boulton, partner and Asia-Pacific lead for healthcare and life sciences private equity at Bain. He pointed out that South-east Asia's healthcare sector relies heavily on private players. For instance, the private sector accounts for roughly half of all hospital beds in Indonesia and the Philippines. 'That structural dynamic creates an enduring role for private capital in expanding and upgrading healthcare infrastructure.' Market participants emphasise that Asian healthcare is not in bubble territory. Boulton pointed out that even with rising valuations, healthcare PE in Asia is still delivering strong returns. Bain's analysis shows that from 2018 to 2023, the median multiple on invested capital (MOIC) for exited healthcare deals in the region was approximately 2.6 – meaning that a US$1 million investment generated a return of US$2.6 million. This compares with the global median MOIC of around two. 'That speaks to the sector's ability to compound value through growth and operational improvement, even in a more expensive entry environment,' noted Boulton. That said, while returns are likely to remain strong in the future, the median MOIC may not be sustained at these levels, he added. Thus, market players said, investors will need to have a clear plan to create meaningful impact and value over the life of their investments.
International Business Times
4 hours ago
- International Business Times
Asian Markets Rally on Strong U.S. Jobs Data and Renewed China Trade Talks
There is a cautious yet optimistic tone in Asian markets this week. After a stressful week of economic anxiety, investors finally had a reason to breathe easier on Friday as job numbers in the United States beat expectations and a fresh round of trade talks between the United States and China offered a glimmer of hope. For many glued to the screen tickers from Tokyo to Hong Kong, it felt as if the week had begun on a mildly more hopeful note. Asian shares rallied on Monday, and the U.S. dollar weakened slightly. The catalyst was unexpectedly strong U.S. payroll data released late last week, which eased fears of a sharp economic slowdown. Wall Street had already cheered the news on Friday, sending major indices up. The S&P 500 gained 1 percent and the Nasdaq 1.2 percent. That momentum then carried over into Asia. Japan's Nikkei gained 0.9%, supported by strong earnings and signs of a rebound in international demand. The Hang Seng Index in Hong Kong climbed 1.3 percent, momentarily rising above the 24,000-point level — a level it hadn't reached since March. The MSCI Asia-Pacific index (excluding Japan) was up 0.5% in early trade. The upswing also follows last week's broader regional rally. The KOSPI in South Korea and STI in Singapore both surged, as traders took relief from the prospect of reduced tensions in the worldwide trade environment. But there was still uncertainty. New standoffs in Los Angeles over immigration policy led President Trump to send in the National Guard. The resulting turbulence sent a dose of caution through otherwise buoyant markets. While not directly linked to economic policy, this domestic volatility could spread to investor confidence internationally. Currency markets, meanwhile, reacted to the change in tone. The dollar fell 0.3 percent against the yen, and the euro rose to $1.1422. Traders will continue to closely watch upcoming U.S. inflation figures, which would likely guide the Federal Reserve's next move on interest rates. A great deal of attention now is focused on the already looming talks between Beijing and Washington, likely to start this week in London. Senior officials from both countries will hold talks, including U.S. Treasury Secretary Scott Bessent and China's China's Vice Premier He Lifeng. The discussions are expected to center on critical minerals, a market in which China is highly influential. Investors are keeping a close eye, and any progress could help deliver more economic stability in the second half of 2025. Gold prices slipped slightly, to $3,303.19 an ounce, and oil prices were mostly flat. U.S. crude was flat at around $64.56 after two days of gains, with supply factors and demand outlook for the global economy in investors' minds.
