As 2020 comes to a close, major Asian economies are poised for a more modest contraction and a stronger recovery from the Covid-19 pandemic than previously expected.
“With a better-than-expected credit matrix, earnings, and earnings outlook, we’ve become more constructive on Asian corporate credit profiles since the second half of the year,” says Mr Lau. In addition, Asian governments generally have the advantage of having ample headroom for additional monetary and fiscal stimulus to counter fresh shocks and bolster the recovery. These make Asian bonds more resilient against uncertainty, says Mr Lau.
“China’s pivot to renewable energy has already created opportunities in fixed income, and we expect this opportunity set to continue to expand.” Previous restrictions to housing ownership targeted at cooling down the market has since been eased following the Covid-19 outbreak. Over the long run, China’s fast-rising third- and fourth-tier cities are expected to drive growth in the sector. For investors wishing to capture these long-term opportunities, current valuations are attractive, says Mr Lau.
“Singapore dollar bonds can offer attractive returns to investors who can navigate the diversity of credit profiles in the market,” says Mr Omar Slim, Singapore-based fixed income portfolio manager at PineBridge Investments.