Illustration photo. (Photo: Vietnam+) Hanoi (VNA)- The Asian Bond Monitor Report released by the Asian Development Bank (ADB) on September 14 showed that long-term bond interest rates in emerging East Asia fell in the period from June 15 to August 24, 2022 amid rising risks and a gloomy economic outlook, even as financial conditions have eased somewhat.
Also according to the report, the 10-year government bond interest rate in local currency has decreased. It signals that investors anticipate slower economic growth. Regional currencies continued to depreciate against the USD.
Financial conditions in emerging East Asia eased somewhat from mid-July to mid-August, as equity markets rallied, risk premiums narrowed and portfolio inflows returned with the expectation that the US Federal Reserve will slow down the rate of interest rate increase.
However, existing and emerging risks continue to weigh on investor sentiment, including lingering inflation concerns, faster-than-expected US monetary tightening, a lingering impact of the COVID-19 pandemic, China's faster-than-expected recession and the long-lasting consequences of the war between Russia and Ukraine.
In Vietnam, the local currency bond market grew 8.1% quarter-on-quarter to 99.5 billion USD. In which, government bonds increased by 7.4% compared to the previous quarter to 69.8 billion USD. Corporate bonds rose 9.5% from the previous quarter to 30 billion USD, driven by a surge in issuance.
Albert Park, ADB Chief Economist, said that market optimism over a softer tightening by the US Federal Reserve has supported a modest improvement in financial conditions. But this is likely to be short-lived, as the US Federal Reserve has made it quite clear in recent weeks that there will be fresh interest rate hikes. Financial conditions in the region are likely to continue to tighten, he noted.
The regional bond market saw a record high issuance in the second quarter of this year, mainly due to China's efforts to stimulate the economy, according to the report. The total amount of regional bonds had grown to 22.9 trillion USD at the end of June. Bond issuance in ASEAN economies increased by 10.3%, increasing the bloc's share of regional bond issuance to 17.5%.
Emerging East Asia includes China, Hong Kong (China), Indonesia, the Republic of Korea, Malaysia, the Philippines, Singapore, Thailand and Vietnam.
In term of local currency bond issuance in 2021, the figure of emerging East Asia rose 7.1% to an all-time high of 9 trillion USD, according to the latest issue of the Asia Bond Monitor, released on March 25 by the Asian Development Bank (ADB).
For the last three months of 2021, emerging East Asia’s local currency bond stock grew 3.6% from the previous quarter to 22.8 trillion USD. Bond yields in the region rose between November 30, 2021 and March 9 this year, amid global inflationary pressure and rising yields in advanced markets.
In Vietnam, faster growth in both the government and corporate bond segments pushed the local currency bond market up by 9.8% from the previous quarter to 91.5 billion USD at the end of December 2021. Annual growth also quickened, to 25.5%.
Government bonds increased 5.3% from the previous quarter to 65.3 billion USD. A jump in issuance drove an expansion of 22.7% in the corporate bond segment. Corporate bonds outstanding totaled 26.3 billion USD, the Asia Bond Monitor said.
The report noted that sustainable bond stock in the ASEAN region plus China, Hong Kong (China), Japan, and the Republic of Korea rose to 430.7 billion USD at the end of 2021 from 274.1 billion USD a year earlier. Green bonds continue to dominate the region’s sustainable bond market, accounting for 68.2% of the total, although interest in social and sustainability bonds is also growing.
ADB is committed to a prosperous, inclusive, resilient, and sustainable Asia and Pacific region, while sustaining efforts to eradicate extreme poverty. Established in 1966, ADB is owned by 68 members, of which 49 are in the region./.
