Asian fixed income to continue to perform, Manulife saysanulife said going into 2021, it was positive on the broader Asian fixed income landscape given its resilient credit fundamentals, continued accommodative monetary and fiscal policy, and downward pressure on the US dollar.
"(With) aggressive rate cut and unprecedented balance sheet expansion by global central banks, more and more developed market government bonds become negatively-yielding.
"In the event of ‘tail-risk-event’, that is US Treasury yields to turn negative (for example, a delay with the distribution of vaccine or deflationary environment), we could see a major asset-rotation among bond and income investors, driven by the ongoing search for ‘positive’ yields, making Asian bonds stand out given their sound fundamentals,” Manulife said.
According to the asset manager, defaults are expected to remain reasonably contained and idiosyncratic in the first half of 2021 before an improvement in the second half as vaccines roll out globally, and Asia’s US dollar bond market is ready for re-financing issues, which are conducive to improve risk sentiment.
"Having said that, credit selection will remain key in Asian markets, as the recovery is expected to uneven across countries and sectors,” it said.
Manulife also sees emerging opportunities in Asian sustainable bonds.
https://www.thestar.com.my/business/busines...m-manulife-says