Halister News

(Bloomberg) -- Neuberger Berman will add bond positions in India, Indonesia and China in the event of yield spikes which are not triggered by domestic fundamentals, Prashant Singh, Singapore-based senior portfolio manager for emerging markets debt at the fund, says in interview.

• Fund likes owning duration at moment
• Macro fundamentals remain strongly favorable for those bonds
• Impact from any Fed tightening would be relatively contained for above markets
• Asian central banks are accommodative and liquidity is fairly flush in the region
• India and Indonesia are high yielders and carry provides some buffer from a total return perspective
• More cautious on Asian currencies at the moment, especially after the sharp rally post-NFP last week and event risks coming up
  • Has hedged positions where it’s not contructive on currency, may be happy to take full exposure in others

• CHINA:
  • Chinese yields primarily driven by domestic factors
  • Domestic bonds not as strongly linked with external markets
  • Broader growth trajectory, inflation trends give a good case to be constructive
  • Base case is for China growth moderation to continue in “very gradual manner”
  • Expects very gradual depreciation path for CNY; any imminent devaluation is unwarranted and unlikely

• INDIA:
  • Room for more monetary easing in India, but not immediately
  • Constructive bond view on India is predicated on monetary transmission being more efficient
  • NOTE: RBI held rates steady on June 7, but said its stance remains ’’accommodative’’

• MALAYSIA:
  • Maintains overall neutral stance on Malaysian bonds
  • While 1MDB concerns can impact sentiment in near term, Malaysian bonds are reasonably fairly priced from a valuation perspective

• NOTE: Indonesia govt bonds have returned 5.11% in the past 3 months while India has fetched 4.12%, highest among major Asian countries
• NOTE: Neuberger Berman manages $110.6b in fixed income assets, according to information from fund website