Daofu Global: Nearly 46% of respondents plan to allocate to fixed income in the future, bullish on Asian economies excluding Japan.

Daiwa Global Investment Management today released the results of a survey, which showed that investors in the Asia-Pacific region are generally optimistic about the economic prospects in Asia. The majority of investors plan to increase their investments in Asia-Pacific region bonds. The survey results showed that nearly 46% of the respondents plan to allocate to fixed income in the future, which is 9% higher than a year ago. At the same time, Asia-Pacific investors plan to allocate 28% of their fixed income investments to Asia outside of Japan in the next 12 months, up from 26% a year ago. The second most important destination for fixed income allocation is Japan, which has remained stable at around 16% in all time frames. Only 14% and 13% of assets are allocated to fixed income in North America and Europe, respectively. The survey was conducted earlier this year and interviewed 600 asset management companies, asset owners, family offices, private banks, and commercial banks from the Asia-Pacific region. When asked which fixed income region they expected to perform best in 2024, 36% of respondents chose Asia excluding Japan, followed by 15% for Japan, and 14% for North America. Only 9% of respondents were most optimistic about the performance of the European bond market. Daiwa Global Investment Management's Fixed Income ETF strategist in the Asia-Pacific region, Minghui Zeng, said that before the Fed raised interest rates in March 2022, bond yields had hit historic lows for a decade, weakening the role of bonds as a source of income. However, the recent rate hike cycle has revitalized bonds in this regard. In addition to local preferences, the strong economic growth in Asia has also boosted the optimism of Asia-Pacific investors. The increasing allocation of Asia-Pacific investors to fixed income in Asia (excluding Japan) shows their growing confidence in the Asian fixed income market as a stable source of returns. Huang Qingxiang, Director of Bond Investment Management in the Asia-Pacific region and Country Manager in Singapore for Daiwa Global Investment Management, said that as inflation gradually comes under control, there is a general market expectation for a global easing cycle, which bodes well for the continued strong performance of many Asian bond markets. In comparison to more mature markets, investors are more optimistic about this region.