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Manulife Asia Total Return Bond Fund

Asia bond: a unique market

Asia bond: a unique market

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Asian bond market opportunities

Learn more

Asia bond: a unique market

 

A blooming and diverse asset class backed by strong local investor base – Asian bonds offer compelling yields and sustainable income opportunities with high quality issuers.

Compelling yields opportunities

Asian credits offers relatively attractive credit spread and yield opportunities for income investors. Historically, the asset class offer higher yields than US and some of the developed market peers. 

High quality issuers

Around 37% of the J.P. Morgan Asia Credit Index (JACI) are government or state owned1 which typically benefit from government support, especially sectors considered systematically important to the economy (e.g. railway operators and utility providers). 

Strong local investor base

Asian issuers with deep local history typically enjoy a strong and loyal investor base. The strengthened regional investor base is also a supportive factor to Asian dollar bonds to be more resilient to external shocks and capital outflows than in the past.

 

Asian bond market opportunities

Attractive valuation emerging in Asian USD credits

Attractive valuations in Asian credits from a relative and historical basis are emerging as credit spreads have been widened. With relatively higher economic growth in the region that supports corporate financials, and monetary policy easing from China, we believe it an opportune time to capitalise on value opportunities from fundamentally strong issuers.

The above information may contain projections or other forward-looking statements regarding future events, targets, management discipline or other expectations. There is no assurance that such events will occur, and the future course may be significantly different from that shown here.

Credit spread of Asian IG and HY over the past 10 years
Credit spread of Asian IG and HY over the past 10 years

Source: Bloomberg, as of 28 February 2022.

Asian HY bonds are measured by JPMorgan Asia Non-Investment Grade Corporate Index; Asian IG bonds are measured by JPMorgan Asia Investment Grade Corporate Index. Investment involves risk. Past Performance is not indicative of future performance. IG refers to Investment Grade. HY refers to High Yield.

 

Most of Asian local bonds offer relatively higher yields

Local bonds issued by China and some South Asian governments offer relatively attractive nominal and real yields. We believe steady COVID-19 vaccine rollout and more border reopening should provide a supportive backdrop.

The above information may contain projections or other forward-looking statements regarding future events, targets, management discipline or other expectations. There is no assurance that such events will occur, and the future course may be significantly different from that shown here.

Asian and developed markets 10-year government bond yield
Asian and developed markets 10-year government bond yield

Source: Bloomberg, as of 28 February 2022.

Investment involves risk. Past performance is not indicative of future performance.

 

Strong growth potential

Asia is expected to remain the bright spot of the global economy. The expected growth rates for Asia is relatively higher than other regions, reflecting the region’s sound fundamentals.

The above information may contain projections or other forward-looking statements regarding future events, targets, management discipline or other expectations. There is no assurance that such events will occur, and the future course may be significantly different from that shown here.

Growth forecast
Growth forecast

*The information in this chart may contain projections or other forward-looking statements regarding future events, targets, management discipline or other expectations, and is only as current as of the date indicated. There is no assurance that such events will occur, and may be significantly different than that shown here. GDP = Gross domestic product.

Source: Bloomberg, Economic Survey, 31 December 2021.

 

Contact your unit trust adviser or call our Customer Service at 03-2719 9271 for more information.

 

 

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