Asian High Yield In A Sweet Spot
Leong Wai Mei, Assistant Director, Asian Credit Research, Fixed Income, Eastspring Investments, shares her outlook for Asian High Yield in 2012.
Expects default rates to rise, but remain lower than historical rates. Three positives 1) low interest rate environment, 2) asian economies doing better than the develop world, 3) valuations for Asian companies are more attractive.
Given current macro outlook, investors are pushed to seek higher yield, but with lower volatility, and high yield is in a sweet spot of higher yield than other fixed income classes, yet are less volatile than equities.
Asian high yield risks include 1) liquidity of companies, 2) downturn in the industries of issuers, 3) corporate governance. Portfolio is currently positioned to take advantage of stable returns, and may add to the portfolio if there is a market downturn. The portfolio is positive on Fillipino corporates, indonesian coal miners, and atractively valued Chinese properties.
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