Emerging Asian bonds ex- China attracted biggest monthly foreign inflow in over four months in December, where investors shrugged off worries of Federal Reserve’s monetary tightening.
According to Reuters, overseas investors purchased a combined net total of $4.72 billion in South Korean, Thai, Indian, Indonesian, and Malaysian bonds last month, their biggest net buying since August, data from regulatory authorities and bond market associations showed.
The five countries’ bond markets attracted overseas capital of $64.02 billion last year, the largest since at least 2013. South Korean bonds accounted for majority of the inflows, receiving $57.81 billion, Reuters reported.
“Korean bonds were likely in demand because foreign investors could buy a low-beta bond, hedge out the currency exposure and still get an attractive 20-30 bps pickup over US Treasury”, said Duncan Tan, a strategist at DBS Bank, to Reuters.
Indonesian and Indian bonds, by contrast, faced cross-border outflows of $5.7 billion and $1.4 billion respectively last year.
