INSUBCONTINENT EXCLUSIVE:
By Ruth Carson and Ameya KarveWestern Asset Management Co
is reducing its Indian government bond holdings as tensions around a new citizenship law and the Kashmir region cloud the economic
outlook.
The $453 billion investor, an affiliate of Legg Mason Inc., is diverting some of its funds into longer-dated Malaysian and Chinese
debt, according to Desmond Soon, head of investment management for Asia ex-Japan
wearing thin as economic growth stutters and a policy making it harder for Muslim migrants to get citizenship stirs protests
hundreds of soldiers to aid local police
about 14 per cent of the population.
Despite five interest-rate cuts last year to shore up growth, yields on 10-year India bonds remain some
of the highest in Asia at 6.64 per cent.
A recent rally in the market, spurred by bond purchases from the Reserve Bank of India, has stalled
as inflation surges to a five-year high
Stagflation looms as the economy grinds toward its slowest expansion in more than a decade.
The central bank will probably refrain from
cutting interest rates in the coming months, and that along with the deteriorating macro environment, is probably why global funds are
expected increase in the fiscal deficit and economic growth not yet rebounding from below-trend levels mean bond yields will be under
higher energy prices, Soon said.
Gobal investors may also pour another $150 billion to $200 billion into Chinese bonds as the debt is
gradually included in global benchmarks, he said.
Other Investment ViewsDollar bond sales from companies in Asia, excluding Japan, to exceed
currency bonds
Asian countries appear poised to embark on fiscal easing, including Korea, Singapore, Hong Kong and Taiwan
