Asia Fixed Income Analyst

Derek Silva

Credit

<p>As the search for yield intensifies, more global investors are getting involved in EM credit, especially Asia. Investors are attracted to the region’s strong Covid-19 response, resilient macro figures and the attractive yields for its corporate bonds.</p><p>But while Asia high yield is hot, China is not. After recent events, China’s SOE credits are no longer regarded as safe as they used to be. Defaults are in the headlines again. And the property sector is under increasing scrutiny, especially for the credits that breach the new ‘three red lines’ set out by regulators. Not to mention the ticking time bomb that is Evergrande. While investors certainly aren’t fleeing China credits now, there is a lot more nervousness.</p><p>So where do investors go to diversify in Asia high yield, when China accounts for a huge slice of the market? We think Indonesia remains in a sweet spot to take on some of the foreign inflows and reverse the poor year-to-date performance relative to the rest of the region. They already performed well in October and we’re seeing more evidence as Indonesian sovereigns continue to perform and its companies are attracting attention from global giants.</p><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/173/708/original/Screenshot%202020-11-24%20at%2019.29.43.png?1606221049" class="editor-image img-responsive" data-smartkarma-image-id="173708"></figure><div class="content-caption">source: https://www.smartkarma.com/insights/morning-views-asia-cifi-holdings</div></section>

As the search for yield intensifies, more global investors are getting involved in EM credit, especially Asia. Investors are attracted to the region’s strong Covid-19 response, resilient macro figures and the attractive yields for its corporate bonds.But while Asia high yield is hot, China is not. After recent events, China’s SOE credits are no longer regarded as safe as they used to be. Defaults are in the headlines again. And the property sector is under increasing scrutiny, especially for the credits that breach the new ‘three red lines’ set out by regulators. Not to mention the ticking time bomb that is Evergrande. While investors certainly aren’t fleeing China credits now, there is a lot more nervousness.So where do investors go to diversify in Asia high yield, when China accounts for a huge slice of the market? We think Indonesia remains in a sweet spot to take on some of the foreign inflows and reverse the poor year-to-date performance relative to the rest of the region. They already performed well in October and we’re seeing more evidence as Indonesian sovereigns continue to perform and its companies are attracting attention from global giants.source: https://www.smartkarma.com/insights/morning-views-asia-cifi-holdings

Asia High Yield Is Hot, China Is Not. Can Indonesia Stay in the Sweet Spot?

Indika Energy

Asia High Yield Is Hot, China Is Not. Can Indonesia Stay in the Sweet Spot?