Asian Bonds May Face Difficult Start To This Year

KUALA LUMPUR, Jan 21 (Bernama) -- Asian bonds may face a difficult start this year but their attractive relative valuations and favourable technicals should limit the downside. In a statement Friday, HSBC Global Asset Management's Chief Investment Officer, Bill Maldonado, said it remained constructive on the outlook for credit and expected high yield to perform better than investment-grade bonds. "Upon settling down of recent market volatility of renminbi's performance, the opening up of the China onshore bond market will gradually attract more foreign participation. "It will also gain international importance as more foreign investors choose to diversity into this market," he said. Maldonado said while the bank remained constructive on this year’s outlook, active management based on a robust valuation discipline and incorporating dynamic asset allocation would be key in successfully navigate the market to capture opportunities across asset classes. "From an asset allocation perspective, HSBC continues to prefer global equities and select emerging market equities and debts, while maintaining a structural underweight in global government bonds," he said. On the ringgit (Malaysia's currency), the bank said, it remained concerned about the potential local note's volatility due to the likely US Federal Reserve's rate increase, although it expected Malaysia's current account balance to improve this year compared to 2016, supported by higher commodity prices. --BERNAMA