asia bond Asia Bond 2018 Outlook Despite the US Fed continuing to normalize monetary policy, the Selengkapnya
2018 Q1
2018 Outlook:
Asian Bonds
Endre Pedersen
Chief Investment Officer,
Fixed Income, Asia (ex-Japan)
Government policies and reforms:
D
espite the US Fed continuing to normalize
monetary policy, the flattening of the US yield
curve contributed to a weaker US dollar which
helped Asian currencies perform strongly in 2017
(Figure 1). In contrast, for 2018, we expect US
rate normalization to proceed at a faster pace that
should see Treasury yields gradually move higher
combined with a stronger US dollar.
Figure 1: Asian currencies appreciated against USD in 2017 YTD
110
China’s government is expected to continue with
deleveraging policies in 2018 while growth is
targeted to be maintained at a reasonable level.
The deleveraging process should help the Chinese
state-owned enterprises (SOE) sector in particular
and reduce overall financial risks for investors.
India is also proceeding with reforms including the
recapitalization of its banking sector to support its
economy.
Credit environment:
109
108
107
106
105
104
JP Morgan Asia Dollar Index
103
102
Jan-17
Feb-17
Mar-17
Apr-17
May-17
Jun-17
Jul-17
Aug-17
Sep-17
Oct-17
Nov-17
Source : Bloomberg, 22 November 2017
Investors have been encouraged by the tentative
progress made with China deleveraging and the
associated improvement to credit fundamentals.
Asian corporate credit profiles are also seeing
some improvement. As reference, Moody’s forecast
2017 default rate for Asian non-financial high-yield
corporates at 2.9%, which is lower than their US
peers1.
In particular, we see three macro trends shaping
Asian fixed income markets in 2018:
Our position going into 2018
We believe these factors will offer opportunities to
coupon yield. We also see value in Australian
government bonds which offer an attractive yield
compared to US Treasuries.
02 Credit
While Asian credit spreads have tightened
significantly, we believe credit will still be attractive
in terms of income potential. We are seeing better
value, on a risk-adjusted basis, in selective high-yield
corporates compared with investment grade due to
their shorter-duration. The Chinese SOE sector is
also appealing with the government expected to
pursue further deleveraging policies.
03 Currency
We have positioned for a potentially stronger US
dollar in 2018. While we expect the Indonesian
rupiah to be broadly stable, supported by its strong
foreign exchange reserves, we have reduced our
exposure to the Indian rupee due to the emergence
of some headwinds to the Indian economy.
Recovering global growth and stable add value to the Asian Total Return Bond Strategy
Conclusion:
inflation:
in the following areas:
• As global growth continues to pick-up, Asian
economies are benefitting from a recovery in
exports, which in turn helps boost domestic
demand. Continued growth will likely maintain
investors’ positioning in Asian markets.
01 Interest rates
• In Asia, inflation remains below trend in most
countries giving central banks the option We continue to favor the higher-yielding bond
to keep interest rates on hold or even cut markets of India and Indonesia that offer attractive
rates further in some cases. A stable inflation
environment is supportive for Asian bonds.
1
In 2018, an improving global economy and
policy reforms, led by China deleveraging, are
expected to dominate opportunities in Asian fixed
income. These factors bode well for Asian bond
fundamentals, and we will look to leverage these
opportunities thoughtfully to deliver consistent
returns for investors.
Moody’s Investors Service, 11 August 2017: forecast year-end 2017 default rate for Asia non-financial high-yield to be 2.9% (lower than the forecast 2017 US high-yield default rate of 3.2%).
Disclaimer
Proprietary Information – Please note that this material must not be wholly or partially reproduced, distributed, circulated, disseminated, published or disclosed, in any form and for any purpose, to any third party
without prior approval from Manulife Asset Management.
These materials have not been reviewed by, are not registered with any securities or other regulatory authority, and may, where appropriate, be distributed by the following Manulife entities in their respective
jurisdictions.
Indonesia: PT Manulife AsetManajmenIndonesia. Malaysia: Manulife Asset Management Services Berhad. Thailand: Manulife Asset Management (Thailand) Company Limited. Singapore: Manulife Asset
Management (Singapore) Pte. Ltd. (Company Registration Number: 200709952G). Vietnam: Manulife Asset Management (Vietnam) Company Ltd. Australia, South Korea and Hong Kong: Manulife Asset
Management (Hong Kong) Limited in Hong Kong and has not been reviewed by the HK Securities and Futures Commission (SFC). Philippines: Manulife Asset Management and Trust Corporation Japan: Manulife
Asset Management (Japan) Limited. Taiwan: Manulife Asset Management (Taiwan) Pte. Ltd. (Investment is not protected by deposit insurance, insurance guaranty fund or other protection mechanism in Taiwan.
For the disputes resulted from the investment, you may file a complaint to the Securities Investment Trust & Consulting Association of the R.O.C. or Financial Ombudsman Institution. License No. 106 Jin-GuanTou-Xin-Xin-008 "Independently operated by Manulife Asset Management (Taiwan) Co., Ltd." / 6F., No.89, Songren Rd., Taipei, Taiwan 11073, Tel: (02)2757-5999, Customer Service: 0800-070-998.)
2018 Outlook:
Asian Bonds
Endre Pedersen
Chief Investment Officer,
Fixed Income, Asia (ex-Japan)
Government policies and reforms:
D
espite the US Fed continuing to normalize
monetary policy, the flattening of the US yield
curve contributed to a weaker US dollar which
helped Asian currencies perform strongly in 2017
(Figure 1). In contrast, for 2018, we expect US
rate normalization to proceed at a faster pace that
should see Treasury yields gradually move higher
combined with a stronger US dollar.
Figure 1: Asian currencies appreciated against USD in 2017 YTD
110
China’s government is expected to continue with
deleveraging policies in 2018 while growth is
targeted to be maintained at a reasonable level.
The deleveraging process should help the Chinese
state-owned enterprises (SOE) sector in particular
and reduce overall financial risks for investors.
India is also proceeding with reforms including the
recapitalization of its banking sector to support its
economy.
Credit environment:
109
108
107
106
105
104
JP Morgan Asia Dollar Index
103
102
Jan-17
Feb-17
Mar-17
Apr-17
May-17
Jun-17
Jul-17
Aug-17
Sep-17
Oct-17
Nov-17
Source : Bloomberg, 22 November 2017
Investors have been encouraged by the tentative
progress made with China deleveraging and the
associated improvement to credit fundamentals.
Asian corporate credit profiles are also seeing
some improvement. As reference, Moody’s forecast
2017 default rate for Asian non-financial high-yield
corporates at 2.9%, which is lower than their US
peers1.
In particular, we see three macro trends shaping
Asian fixed income markets in 2018:
Our position going into 2018
We believe these factors will offer opportunities to
coupon yield. We also see value in Australian
government bonds which offer an attractive yield
compared to US Treasuries.
02 Credit
While Asian credit spreads have tightened
significantly, we believe credit will still be attractive
in terms of income potential. We are seeing better
value, on a risk-adjusted basis, in selective high-yield
corporates compared with investment grade due to
their shorter-duration. The Chinese SOE sector is
also appealing with the government expected to
pursue further deleveraging policies.
03 Currency
We have positioned for a potentially stronger US
dollar in 2018. While we expect the Indonesian
rupiah to be broadly stable, supported by its strong
foreign exchange reserves, we have reduced our
exposure to the Indian rupee due to the emergence
of some headwinds to the Indian economy.
Recovering global growth and stable add value to the Asian Total Return Bond Strategy
Conclusion:
inflation:
in the following areas:
• As global growth continues to pick-up, Asian
economies are benefitting from a recovery in
exports, which in turn helps boost domestic
demand. Continued growth will likely maintain
investors’ positioning in Asian markets.
01 Interest rates
• In Asia, inflation remains below trend in most
countries giving central banks the option We continue to favor the higher-yielding bond
to keep interest rates on hold or even cut markets of India and Indonesia that offer attractive
rates further in some cases. A stable inflation
environment is supportive for Asian bonds.
1
In 2018, an improving global economy and
policy reforms, led by China deleveraging, are
expected to dominate opportunities in Asian fixed
income. These factors bode well for Asian bond
fundamentals, and we will look to leverage these
opportunities thoughtfully to deliver consistent
returns for investors.
Moody’s Investors Service, 11 August 2017: forecast year-end 2017 default rate for Asia non-financial high-yield to be 2.9% (lower than the forecast 2017 US high-yield default rate of 3.2%).
Disclaimer
Proprietary Information – Please note that this material must not be wholly or partially reproduced, distributed, circulated, disseminated, published or disclosed, in any form and for any purpose, to any third party
without prior approval from Manulife Asset Management.
These materials have not been reviewed by, are not registered with any securities or other regulatory authority, and may, where appropriate, be distributed by the following Manulife entities in their respective
jurisdictions.
Indonesia: PT Manulife AsetManajmenIndonesia. Malaysia: Manulife Asset Management Services Berhad. Thailand: Manulife Asset Management (Thailand) Company Limited. Singapore: Manulife Asset
Management (Singapore) Pte. Ltd. (Company Registration Number: 200709952G). Vietnam: Manulife Asset Management (Vietnam) Company Ltd. Australia, South Korea and Hong Kong: Manulife Asset
Management (Hong Kong) Limited in Hong Kong and has not been reviewed by the HK Securities and Futures Commission (SFC). Philippines: Manulife Asset Management and Trust Corporation Japan: Manulife
Asset Management (Japan) Limited. Taiwan: Manulife Asset Management (Taiwan) Pte. Ltd. (Investment is not protected by deposit insurance, insurance guaranty fund or other protection mechanism in Taiwan.
For the disputes resulted from the investment, you may file a complaint to the Securities Investment Trust & Consulting Association of the R.O.C. or Financial Ombudsman Institution. License No. 106 Jin-GuanTou-Xin-Xin-008 "Independently operated by Manulife Asset Management (Taiwan) Co., Ltd." / 6F., No.89, Songren Rd., Taipei, Taiwan 11073, Tel: (02)2757-5999, Customer Service: 0800-070-998.)