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Asian bonds see foreign inflows for 15th successive month in August

Foreigners were net buyers of Asian bonds for a fifteenth consecutive month in August as investors shrugged off fears that the U.S. Federal Reserve might taper its asset purchases later this year.

Overseas investors purchased a combined net total of $7.4 billion in Indonesian, Malaysian, South Korean, Thai and Indian bonds last month, a 23% increase over July, data from regulatory authorities and bond market associations showed.

“The distribution improved as well,with most bond markets attracting robust inflows,” said Khoon Goh, head of Asian research at ANZ.

“There is no sign that investors are getting concerned about the US Federal Reserve’s upcoming tapering of its bond purchase programme.”

Thai and Malaysian bonds received a net $1.68 billion and $1.6 billion worth of foreign capital last month, while Indian bonds also attracted $1.64 billion from overseas, after seven straight months of outflows.

Malaysia’s political uncertainty eased after Ismail Sabri Yaakob took charge as a new prime minister at the head of a coalition last month, though his United Malays National Organisation was defeated in the last election, back in 2018, when it lost power for the first time in the post-colonial era.

“We are slightly more constructive on Asian local bonds,” said Oliver Williams, portfolio manager at Insight Investment, adding that inflation dynamics are very different from North America and other regions.

“It is relatively benign scenario in Asia,” he said.

Indonesian bonds received foreign inflows of $1.03 billion last month.

Indonesia’s central bank repeated a pledge to keep interest rates low until there are signs of rising price pressures to support an economic recovery, Destry Damayanti, its senior deputy governor, told a parliamentary commission on Tuesday.
Source: Reuters (Reporting by Gaurav Dogra and Patturaja Murugaboopathy; Editing by Simon Cameron-Moore)

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