HALISTER1: AXA Sees More Value in Sovereign Bonds of Asian Frontier Markets

AXA Sees More Value in Sovereign Bonds of Asian Frontier Markets

(Bloomberg) -- While sovereign bonds of traditional Asian emerging markets are expensive, AXA Investment Managers prefers to focus on frontier markets in the region, says Jim Veneau, the company’s head of Asia fixed income.
  • Pakistan, Mongolia and Sri Lanka offer relative value
  • Philippines and Korea are “clearly expensive”
    • Indonesia short-end govt bonds are expensive while long- end is super volatile; prefers quasi sovereign for higher yield
    • Mongolia has been a bit volatile lately, but good in terms of return and diversification within Asia
  • Value in Chinese govt and policy bank bonds onshore
    • CNH corporate bond market is a “sweet spot” for short duration investment; prefers BB to BBB ratings; onshore bonds are extremely tightly valued and almost in a bubble
  • U.S. rate decision is a risk for Asia, with long duration Philippines and Indonesia bonds particularly sensitive to a hike
    • Fed likely to hike at yr-end, not in Sept.
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

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Jim Veneau (Axa Investment Managers Asia Ltd)

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