Hong Kong: There is a large structural shift in capital flows to Asian bond markets from Europe and the United States as investors warm up to the region’s strong growth prospects, State Street Global Advisors said.
Fiscal problems in the eurozone economy and smaller public debt to GDP ratios in Asia compared to Western counterparts made them more attractive, Bill Street, managing director and head of international alpha strategies told reporters on Friday.
“In Asia, I think government bonds offer good value on the caveat that some look a bit rich,’ Street said during a visit to Hong Kong.
SSgA is the investment management arm of State Street Corp, the world’s second-biggest money manager with $1.9 trillion in assets under management.
“The reason is that they are underpinned by strong fundamentals while there is a lot of concern and lot of risk premium in the Europoean bond markets,” he said.
In 2010, the Boston-based firm estimates government debt as a percentage of GDP at 4.4% for the region compared to 12.2 for the UK, 11.4% for the United States and 6.6% for the eurozone.
On Greece, he said the debt crisis would likely be resolved in a few weeks, which would lead to a sharp tightening in spreads and called its threat to go the IMF “brinkmanship.”
Athens raised the stakes in its quest for EU help on Thursday to tackle its debt crisis, saying it could not achieve promised deficit cuts if its borrowing costs remained high and may have to call in the IMF.