investment viewpoints

    Asia outlook: 5 fixed-income themes for 2022

    Asia outlook: 5 fixed-income themes for 2022
    Dhiraj Bajaj - Head of Asia Fixed Income

    Dhiraj Bajaj

    Head of Asia Fixed Income
    Asia Fixed Income team -

    Asia Fixed Income team

    Following a volatile year in which Chinese defaults led Asia high-yield (HY) to its worst annual return since the financial crisis, and the state-led bailout of Huarong1 was essential for the investment-grade (IG) market to recover, what comes next?

    Covering macro and markets, our Asia fixed-income outlook for 2022 focuses on five themes:

    • Lowflation to stagflation: sustained but contained inflation should accompany growth supported by cyclical factors, like inventory restocking, and structural drivers, such as improved productivity
    • Treasuries: Federal Reserve actions will be crucial amid elevated inflation and continuing growth. We expect US yields to rise, especially in the intermediate section of the Treasury curve, due to stronger demand
    • China macro: as property-sector weakness undermines growth, the authorities are likely to deploy fiscal and monetary stimulus in an effort to boost the economy. The ‘common prosperity’ agenda will support services and consumption
    • Asia IG: Higher spreads and shorter duration will make Asia IG attractive, with corporates supported by recovering consumer demand, labour-market conditions and policy easing in China
    • Asia HY: Following a year in which China property defaults totalling USD 50 billion drove the market to an 11% decline, we expect opportunities to arise given the greater stability in other countries and emergence of sectors like Indian renewable energy and telecommunications

    To read our Asia Fixed Income 2022 outlook, please use the download button provided.

    Register to attend our webinar on 27 January, ‘What’s next for Asia income?’.

    To learn more about our Asia fixed-income strategies, click here.

     

    Sources

    [1] Any reference to a specific company or security does not constitute a recommendation to buy, sell, hold or directly invest in the company or securities. It should not be assumed that the recommendations made in the future will be profitable or will equal the performance of the securities discussed in this document.

     

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