2019 Outlook: Asian credit

Invesco’s Fixed Income team in Asia shares its views on how the Asian credit market will perform in 2019.

Feb 26, 2019 | Invesco Fixed Income team in Asia

Heightened geopolitical risks and weakening economic sentiment dimmed investor sentiment at the end of 2018, and Invesco’s Fixed Income team in Asia expects some of these risks to extend into 2019, with concerns over the ongoing trade war between the US and China dominating headlines.

However, the team is optimistic about Chinese growth and on increased foreign direct investment in the region. China’s policy easing measures appear to support economic growth after a deceleration in the beginning of 2018, attributed to weakening domestic consumption and the impact of deleveraging.

Looking to 2019, the team is optimistic about Asian credit, especially China’s US-dollar (USD) bond market. Invesco favors bonds with short maturities and attractive yields issued by solid credit quality names. Asian high-yield dollar bonds are likely to be more valuable than their investment grade counter-parts. Within investment grades, the team thinks BBB-grade bonds will perform better than A-grade ones, and among them, the team thinks that those short duration bonds issued by local government funding vehicles or Chinese companies’ senior perpetual bonds will outperform. Among Chinese high-yields, Invesco believes that those issued by property firms and Chinese banks’ additional tier 1 (AT1) bonds will outperform.

Click on “Download PDF” to read the team’s analysis.

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