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Talking points: Investment in Asia
12 March 2013
Asian markets are again gaining momentum. Leading asset managers tell Paulina Pielichata about which countries offer the best prospects
STEPHEN CHANG, HEAD OF ASIAN FIXED INCOME, JPMORGAN ASSET MANAGEMENT
2012 has been a great year for Asia fixed income, with stand-out performance in high yield. Capital gains came from lower treasury yields and significant spread compression. Credit spreads have some room to grind narrower during Q2. Even more interesting alpha opportunities will come from FX. Asian currencies have compared favourably for some time against other major markets, with healthy balance sheets as well as better growth rates, fiscal balances and balance-of-payment situations. The interest rate differential makes Asian currencies attractive.
For 2013, we see two catalysts. First, the US Federal Reserve has stepped up its quantitative easing policy, which has previously been associated with Asia FX strength. Second, equity valuations are cheap and earnings improving, which should attract inflows and lead currencies higher. We see the offshore CNY growing further, both for government and corporate instruments.
They can provide...
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