(Reuters) – Foreign investors remained net buyers of Asian bonds for the eleventh consecutive month in April, as a rebound in regional economic activity and falling US yields boosted confidence.
Foreign investors bought $ 6.37 billion net of Asian bonds last month, according to data from regulators and bond market associations. But inflows edged down slightly from March as investors became cautious due to the increase in COVID-19 cases in the region.
“The decline in US 10-year bond yields last month eased some selling pressure in Asian asset markets,” Khoon Goh, head of Asia research at ANZ said in a report.
Chart: Foreign flows to Asian bonds:
Indonesian bonds drew inflows for the first time in three months, totaling $ 914 million, as its industrial activity picked up speed last month.
South Korean bonds received $ 3 billion in inflows last month, while Malaysian and Thai bonds got $ 1.5 billion and $ 926 million, respectively.
Cross-border investors sold Indian bonds net for $ 18 million last month, marking a fourth consecutive month of exits as the country grapples with a spike in coronavirus infections and deaths.
Most analysts said the outlook for bond entries would depend on the pace of vaccine distribution and how quickly the region recovers from the pandemic.
“Total returns for governments in local currency decline as investors reflect on two risks – a resurgence of COVID-19 in Asia and the prospect of high inflation in the United States,” said Eugene Leow, strategist at DBS Bank in a report.
“Without a sufficiently high proportion of the vaccinated population, there will always be risks of another wave of COVID-19.”
Graph: Change in yields on 10-year government bonds:
Reporting by Gaurav Dogra and Patturaja Murugaboopathy; Edited by Rashmi Aich and Uttaresh.V