The long awaited decoupling of the Asian and European markets earlier this year has seen Asian corporate bonds cementing their appeal with investors, according to specialist fixed income investment manager, Omega Global Investors.
George Vassos, Managing Director of Omega, believes the last few years have seen a fundamental economic shift to the East – and that investors have finally recognised the fact.
“Asian corporations have strong balance sheets relative to their global sector peers and often with much less risk, which makes them an attractive option for investors looking for superior risk adjusted returns,” said Mr Vassos.
“Banks are just one example. The European and US banks have certainly had their issues over the last few years and those are continuing. On the other hand, their Asian counterparts, such as ICICI Bank and OCBC Bank, have experienced strong growth, strong balance sheets and have a far more positive long-term outlook with a lower probability of downgrade or default,” said Mr Vassos.
According to Mr Vassos, Omega is one of the few investment managers that saw the potential of Asian corporate bonds prior to them becoming more widely favoured.
“Omega’s Corporate Bond fund has had a 40 per cent allocation to Asian corporate bonds, excluding Japan, since its inception in 2009. Our proprietary risk-controlled methodology uses key criteria such as profit, liquidity, gearing and solvency to assess risk and allow us to identify quality securities for our clients. Using this methodology, we were able to identify the quality securities well ahead of the pack,” said Mr Vassos.
Mr Vassos went on to explain that the corporate bonds Omega has selected are underpinned by strong fundamentals, and therefore have a strong, long term positive outlook.
“At Omega we expect to see an increased demand for Asian corporate bonds over the coming year as growth in the region continues. We’re particularly looking at corporations issuing bonds in countries such as Malaysia, Thailand, Taiwan, Korea and Singapore that are showing signs of maintaining that growth over the next few years,” said Mr Vassos.
