Webinar | What's next for Asia Income?

Watch the replay of our Asia Fixed Income Webinar: How should investors approach Asia investment-grade (IG) and high-yield (HY) markets in 2022?  

Dhiraj Bajaj, Head of Asia Fixed Income, sees the market bottoming out after recent sharp increases in Treasury yields and the wave of high default rates in China passing soon.

The Singapore-based investment team behind our award-winning Asia credit franchise of USD 7.3 billion AuM¹ addressed the following: 

• A new growth and inflation regime – cyclical and structural dynamics should bring the post-financial crisis period of lowflation and secular stagnation to a close, reflecting the pandemic’s role in fundamentally changing the global growth and inflation environment.
• China’s move from tightening to easing – as regulatory crackdowns, a zero-covid policy and property-sector woes drag on the economy, the authorities will likely deploy fiscal and monetary stimulus in an effort achieve their targeted rate of expansion. We expect this to be front loaded in 1H to avoid a hard landing.
• An overall positive bias in Asia IG – in our view, the effects of higher Treasury yields should be mitigated by better prospects for IG spreads amid improving corporate fundamentals, a more positive outlook for China policy and supportive bond technicals.
• In Asia HY, a return to first principles with lower default rates – following widespread defaults of over 10% and the worst annual performance on record since 2008, investors have a cleaner Asia HY universe. We expect lower default rates in 2022 to drive income generation and recovery from a new base.

Sources

1 Source: LOIM, as of 31 October 2021. Lipper award winner for 2018 (UK), 2019 (Germany, Austria) and 2020 (Switzerland, Nordics, France) and Fund Selector Asia Platinum Award Winner. Awards and ratings subject to change without notice. Past performance is not a guide to future performance.

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