Asia Fixed Income: on a firm foundation

US interest rates little impact

Bright spots have emerged in Asia’s credit outlook after the global market turmoil in the first quarter of the year.

Credit fundamentals have held steady despite pressures from rising US and regional rates and concerns about inflation's impact on earnings. Given the short duration profile of Asia bonds in general, we think the interest rate trajectory in the US will have minimal impact on the asset class. Nevertheless, we remain underweight on duration.   The spotlight for the remainder of year will likely remain on China and the impact of its policy easing in stemming the economic slowdown and stabilising the property sector, which is a key component of the Asia and emerging market high-yield ma...