Investors will buy Asian bonds in the next 12 months as slowing global growth makes other assets less attractive, according to Iwan Azis, head of the office of regional economic integration at the Asian Development Bank.
Volatile equity markets and a banking industry ravaged by the Libor scandal have increased the relative appeal of emerging-market debt, Azis said by phone from Manila on Sept. 7. The Philippines-based lender publishes its quarterly Asian Bond Monitor today.
“Investors are having difficulty parking their money and the bond market is the only ‘safe’ market,” Azis said. Fixed-income securities will remain “strong,” implying continued stagnation in the world economy, he said.
In the seven-day period ended Sept. 6, funds dedicated to emerging-market debt had their 13th-straight week of inflows, the longest stretch since mid-2011, according to a Morgan Stanley report citing data provider EPFR Global.
Growth in the global economy will slow to 2.3 percent this year from 2.9 percent in 2011, according to the median forecast of analysts surveyed by Bloomberg.
“Our message to policy makers is ’Don’t be complacent, because the contagion is there,’ Azis said.