BlackRock Asia Weekly Market Views

23 Feb 2016

Click here to see our latest Portfolio Manager views

Weekly Highlights

Asia credit has not been immune from the recent global investor uncertainty, however the asset class has performed relatively well compared to peers. Macro events – including the subsiding of concerns around European bank capital and the renminbi – led to a stronger performance over this past week. While questions remain around how long this pause in volatility will last, we expect to see China to take a firmer footing at the G20 meeting later this week.
Expectations for US growth and Fed tightening continue to fade with the market now pricing in no further rate rises for 2016. The Bank of Japan’s recent move towards a negative deposit rate failed to halt the appreciation of the yen and other Asian currencies continue to appreciate against the US dollar as well. However, returns in Asian local currency bonds were driven primarily by lower bond yields as bond yields in Asia fell with global rates. The Indonesian local bond Market performed especially well with asset flows into the market particularly strong.
Performance on the USD Asian credit market was flattish with positive treasury return offsetting losses due to wider credit spreads. Despite that, spread performance on Asian credit continues to be very resilient, outperforming both broader emerging markets and US credit. Within credit, investment grade continues to outperform high yield as investors sought solace in safer income. The Mongolian credit complex came under pressure after comments from Moody’s saying that the sovereign’s credit profile will come under pressure due to falling commodity prices and lower growth in China. However, the impact to the broad market was muted with Mongolia just 0.4% of the Asian credit universe.

Country views from the BlackRock Asian Fixed Income Team

In Singapore, this material is issued by BlackRock (Singapore) Limited (co. registration no. 200010143N). For informational or educational purposes only. Investment involves risks. Past performance is no guarantee of future results. There is no guarantee that any forecasts made will come to pass. Reliance upon information in this material is at the sole discretion of the reader. International investing involves additional risks, including risks related to foreign currency, limited liquidity, less government regulation and the possibility of substantial volatility due to adverse political, economic or other developments. The two main risks related to fixed income investing are interest rate risk and credit risk. Typically, when interest rates rise, there is a corresponding decline in the market value of bonds. Credit risk refers to the possibility that the issuer of the bond will not be able to make principal and interest payments. This material is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. All data in this communication is sourced from Bloomberg/Thomson Reuters/Datastream as of February 23, 2016 and the opinions expressed are as of February 23, 2016 and may change as subsequent conditions vary. The information and opinions contained in this material are derived from proprietary and non-proprietary sources deemed by BlackRock to be reliable, are not necessarily all-inclusive and are not guaranteed as to accuracy. There is no guarantee that any forecasts made will come to pass. They do not necessarily reflect the views of any company in the BlackRock Group or any part thereof and no assurances are made as to their accuracy. Index performance is shown for illustrative purpose only. You cannot directly in the index. Company name is only for explanatory purposes and does not constitute as investment advice and is subject to change. Any investments named within this material may not necessarily be held in any accounts managed by BlackRock. ©2016 BlackRock, Inc. All Rights Reserved. (S0216-104)

See all related articles