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Survey shows APAC investors eye regional bonds for yield, diversification and stability

Feb 11, 2025

Asset owners and managers in Asia Pacific (APAC) are looking to domestic and regional bond markets for portfolio diversification and income, reveals a survey commissioned by State Street Global Advisors’ ABF Pan Asia Bond Index Fund (PAIF).

Survey shows APAC investors eye regional bonds for yield, diversification and stability

Asia-based asset managers and owners are boosting allocations to regional fixed income markets, supported by multiple factors: the diversity of the economies; financial stability; attractive yields; and a growing diversity in the types and size of domestic investors.

Theses dynamics are reinforced by the findings of a survey commissioned by PAIF, which shows a growing optimism among regional investors about bonds in their home markets.

Among key takeaways from the survey:

Just over one-third (36%) of respondents expect fixed income markets in Asia ex-Japan to produce the best returns globally, followed by Japan (15%) and North America (14%).
One-third of respondents cited diversification as the main attraction of Asia ex-Japan fixed income markets, followed by income and improving economic conditions, each with 32%.
72% of respondents expressed the highest level of confidence in Singapore (amid the eight jurisdictions in the Markit iBoxx ABF Pan-Asia Index), compared with Hong Kong at 64% and Malaysia at 63%.
Overall, APAC asset managers and owners lean more towards high-quality bonds.

The region’s economic diversity is a notable benefit for investors. “The beauty of having [exposure to] all of these different markets is that they move at different paces and in different directions. So, while some Asian markets have been in a tightening cycle, China has been more accommodative to support its economy,” says Marie Tsang, ETF investment strategist at State Street Global Advisors.

At the same time, the survey highlighted the top threats in investors’ minds – recession and inflation, followed by geopolitical tensions and currency depreciation.

Bright future for Asian bonds

Despite various concerns for asset managers and owners, continued expectations of an interest rate cutting cycle in developed markets should relieve downward pressure on many emerging market currencies. Combined with today’s stronger regional economies in Asia, regional bonds are well positioned to outperform over the long term.

Click the links below to read more insights from the survey

Access the full report ‘Unlocking opportunity in Asia fixed income’

_Disclosures

_{For investment professional use only.}

_{The ABF Pan Asia Bond Index Fund (the ‘PAIF’) is an authorized unit trust in Hong Kong and Singapore only. Authorization does not imply official recommendation. Nothing contained here constitutes investment advice or should be relied on as such. Past performance of PAIF is not necessarily indicative of its future performance. Distributions from PAIF are contingent on dividends paid on underlying investments of PAIF and are not guaranteed. Listing of PAIF on the Hong Kong Stock Exchange and the Tokyo Stock Exchange does not guarantee a liquid market for the units and PAIF may be delisted from the Hong Kong Stock Exchange and/or the Tokyo Stock Exchange. Investors should read the PAIF’s prospectus including the risk factors. The Prospectus for PAIF is available and may be obtained from State Street Global Advisors Singapore Limited (Singapore Company Registration number: 200002719D, regulated by the MAS) or can be downloaded from www.abf-paif.com*. For Japanese investors, additional to prospectus, please read statutory disclosure documents and others which may be obtained from https://disclosure.edinet-fsa.go.jp/.}

_{All the information contained in this publication is from the PAIF “Unlocking Opportunity in Asia Fixed Income” survey in February 2024 and State Street Global Advisors through the period ended November 30, 2024. The information are subject to change based on market and other conditions. The whole or any part of this work may not be reproduced, copied or transmitted or any of its contents disclosed to third parties without SSGA’s express written consent. This publication and the information contained herein may not be distributed and published in jurisdictions in which such distribution and publication is not permitted.}

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