Investors in Asian bonds shift position significantly: Survey

Investors in Asian bonds shift position significantly: Survey

Hong Kong: According to a survey by Morgan Stanley, the investors in Asian bonds have significantly shifted positions to be overweight high-grade credits and underweight high-yield debt.

There has been a considerable rise in the number of respondents in the survey, from 40% in August to 78% now, who formed the overweight investment-grade debt.

The proportion underweight high-yield credits for the same period has jumped to 90% from 50%.

Morgan Stanley’s survey was conducted between 9 November and 16 November among 46 respondents comprising investors like banks, hedge funds, insurance companies, mutual funds and proprietary desks.

Geographically, 87% were from Asia, 7% from Europe and 6% belonged to North America.

Several participants were of the view that the debt market was likely to be range bound in the next six months. More than half felt the movement would be sideways compared with just over 40% in August.

The proportion with a view that the market would rally or sell-off had declined in that period.

While the survey was positive on China, Vietnam, Hong Kong, India and Singapore, it was “very negative" on Pakistan, where political turmoil had soured investor sentiment significantly.

The latest survey showed about 60% of the respondents felt defaults in the Asian region would pick up in 2009 and 40% said the pick up would take place in 2008.

This is in contrast with August, when nearly 60% said defaults would rise in 2008.