Askume, Sept 16 – Asian bonds attracted foreign investment for a fourth straight month in August on expectations that the Federal Reserve will begin easing interest rates in September.
Foreign investors bought large amounts of regional bonds in Indonesia, India, Malaysia, South Korea and Thailand in August, totaling $14.06 billion, the highest level since at least 2019, according to data from regulators and bond market associations.
Foreign capital inflows into South Korean bonds rose to $5.99 billion, their highest level since May 2023. Interest in Indonesian bonds also remained strong, with inflows reaching $3.5 billion, marking the fourth consecutive month of net gains for foreign investors.
In addition, bonds from India, Malaysia and Thailand attracted US$2.14 billion, US$2.06 billion and US$370 million, respectively.
Traders expect the Fed to cut rates enough this week to prevent further deterioration in the labor market, rather than opt for an initial smaller reduction.
Analysts expect some Asian central banks to follow suit, after the Bangko Sentral ng Pilipinas (BSP) cut interest rates by 25 basis points in August.
“Bond flows should remain strong as the Fed’s rate cutting cycle paves the way for rate cuts by Asian central banks,” said Khoon Goh, head of Asia research at ANZ Bank.
“We expect Bank Indonesia (BI) and Bank of Korea (BOK) to also join the rate-cutting cycle following the Fed’s action,” he added.
