HALISTER1: Buy 10-Year Malaysian Bonds as Bearish View Overdone: StanChart

Buy 10-Year Malaysian Bonds as Bearish View Overdone: StanChart

(Bloomberg) -- Investors should buy 10-year Malaysian govt bonds at 4.11% on an unhedged currency basis, analysts at Standard Chartered including Lawrence Lai, write in note Friday.
  • Position targets 10-year yield at 3.8% with stop-loss 4.30%
  • Current bearish outlook for MYR debt may overstate the risks as curve steepening pressure from USTs has eased and BNM still has room to lower policy rate
  • Supply risk for long-end MYR debt is higher in 2017 but local demand is constructive and negative foreign sentiment towards ringgit notes has eased
  • Valuation-wise, total returns for MYR debt are attractive among low-yielding Asian local currency
    • 10-yr Malaysian bonds offer 142-bps pick-up over similar-maturity Thai debt
  • MYR is undervalued as it has lost 7% since February 2016 while crude prices have climbed 180% during the period
  • NOTE: Malaysia 10-year yield up 2bps to 4.13%
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

People
Lai Yew Son (Lai & Co)
Lawrence Lai (Standard Chartered PLC)

To de-activate this alert, click here

UUID: 7947283