The fact that foreign demand for some of the Asian local currency bonds seems a bit scarce in August is starting to show signs of a reversal in the market. Today many investors begin to show worried that the outlook in the marketplace to be more a long-term yield. The foreign investors are starting to hold market place investments in the Malaysia and Southeast Asian countries. What does this all mean?
Top Central Banks Lack Means
The fear for most investors is that the top Central Banks in the Asian countries may not have the means to support the economy. It has come to the investors that the bank of Japan may take the lead by forcing longer-term yields which would be steepening yield curves and weigh on emerging market bonds. The Asian government begins to have their doubts about the US since they are tightening up on their interest rates from the Federal Reserve.
The major investment bank JP Morgan has now decided to include-denominated Islamic bonds from Malaysia causing the country to become the hot spot for Asia bond markets. The country enjoyed an RM 6.0 billion influx of bonds. This was the largest shown since April. The Asian markets are vastly increasing with help from companies like JP Morgan. Other countries like Turkey and Indonesia are following suit and starting to show major increases.
Crude Oil Major Factor
The fact is that since the decrease of crude prices has come about it will undermine the country’s oil and gas revenue. This will be a factor in causing the decline in the market. South Korea will become a victim with the investors holding back bonds. Foreign investors cut their holdings already about 917 billion. The offshore funds from net buyers will have to hold up for these Asian countries. Singapore is looking to find future funds to help keep them alive in this ever changing market.
Shin Dong-su one of the analyst at Eugene Investment & Securities in Seoul declared that the household debt issue needs to be solved in order for the BOK to move. Some of these situations are caused by foreign investors who are fearful of the market. The banks are not financially sound enough to keep these Asian economies steady enough to put a large influx of investments in securities. The fact that the price of crude oil has gone down has made the situation even worse.
The Asian Market is looking for a stronger foothold in the market and that is why they depend on companies like JP Morgan, Ameritrade, and Eugene Investment & Securities to help with their bailout. The United States put a cap on the interest paid out giving a much tighter hold on gains. The fact that the crude oil has decreased also lends a factor in the decline in the market. While some markets are showing a remarkable increase in Asia others are not. Time will tell how this situation will go hopefully with a stronger economy the market will show an increase needed for the Asians.
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