Market Trends of APAC Fixed Income Assets Management Industry
This section covers the major market trends shaping the APAC Fixed Income Assets Management Market according to our research experts:
Corporate Bonds in Malaysia Driving the Market
Corporate bond issuance in emerging market economies increases when markets exhibit substantial liquidity. The Malaysian corporate bond market has grown dramatically over the last few decades. Corporate bonds outstanding as a proportion of GDP in Malaysia have increased steadily. As a percentage of GDP, the Malaysian corporate bond market is among the largest local currency bond markets in emerging market economies. Corporate sukuk, or Islamic bonds, have grown the most.
However, corporate bonds' liquidity has not progressed at a similar pace. Low liquidity appears to characterize both conventional and Islamic corporate bonds in Malaysia. Illiquidity may hamper access to local currency debt financing, so its measurement is an important topic for regulators and issuers.
Emerging Market Economies in Asia-Pacific Witnessing Bond Yields
A rational investor would invest in a fund only if its expected return exceeds participation costs. As the expected return of a fund is often based on its past performance, mutual funds with higher participation costs can attract inflow only when they have a track record of outperforming returns. As the assets held by EME bond funds are generally low in liquidity, managers of these funds have adopted practices to pre-empt fire sales.
Australia also has a significant government and corporate bond market and is home to the largest financial futures and options exchange in the Asia-Pacific region. Also, despite the occasional wobble, China's economic expansion has had a huge cumulative impact. An infographic on real returns from bonds in selected countries is presented below.
