Latest news with #LeonardKwan
Business Times
6 days ago
- Business
- Business Times
Rate cuts seen lifting Philippine bonds from Asia's lowest ranks
[MANILA] Philippine bonds are poised to rebound from the bottom of Asia's debt rankings, thanks to the central bank's room to cut rates and their relative insulation from US Treasury moves. Interest rates in the Philippines, after adjusting for inflation, are the highest in emerging Asia. That means Bangko Sentral Ng Pilipinas (BSP) can slash rates further on top of its 125 basis points of cuts over the past year, a move that would favour local debt. Philippine bonds, along with other local currency debt, are being sought by investors diversifying from US assets as the US dollar weakens in the face of US President Donald Trump's tariffs. The South-east Asian nation's bonds have an edge due to its minimal correlation with Treasuries, which are facing pressure due to US fiscal concerns. 'We have a constructive view on Philippine government bonds, given our views on the inflation outlook,' said Leonard Kwan, a Hong Kong-based portfolio manager at T Rowe Price Group. Their 'de-correlated profile' to Treasuries is another draw for investors, he said. Benchmark 10-year yields in the Philippines have risen 10 basis points this year to 6.28 per cent, while nearly all other emerging Asian yields on similar tenors have fallen in that period. Peso bonds underperformed amid wider budget deficit expectations and the impact of an earlier rise in oil prices. However, inflation undershooting BSP's 2 to 4 per cent target for four straight months has positioned Philippine bonds for gains. The local policy rate after adjusting for recent inflation now stands at 385 basis points, the most in emerging Asia, giving the BSP a greater leeway to cut rates. A NEWSLETTER FOR YOU Friday, 8.30 am Asean Business Business insights centering on South-east Asia's fast-growing economies. Sign Up Sign Up The dovish wagers are starting to show up in market forecasts, with the Philippine 10-year yield estimated to fall to 5.67 per cent by year-end, according to a median of economists surveyed by Bloomberg. That level was last seen in October 2024. Peso bonds are also likely to be more shielded from any losses in US debt as concern over the fiscal deficit and uncertainties over further Federal Reserve rate cuts unsettle markets. The 120-day correlation between 10-year Philippine bonds and Treasuries stands around 0.10, according to Bloomberg calculations, signalling that both assets hardly move in lockstep. Investors are also watching if JPMorgan Chase would include Philippine debt into its local-currency emerging-market debt index this year. Citigroup sees the inclusion of Philippine bonds in global indexes providing another tailwind for the nation's bonds, strategists Gordon Goh and Rohit Garg wrote in a note on Monday. They also recommended maintaining a long currency-hedged position in 10-year Philippine government bonds on expectations of further policy rate cuts and disinflation pressure. BLOOMBERG
Mint
6 days ago
- Business
- Mint
Rate Cuts Seen Lifting Philippine Bonds From Asia's Lowest Ranks
(Bloomberg) -- Philippine bonds are poised to rebound from the bottom of Asia's debt rankings, thanks to the central bank's room to cut rates and their relative insulation from US Treasury moves. Interest rates in the Philippines, after adjusting for inflation, are the highest in emerging Asia. That means Bangko Sentral Ng Pilipinas can slash rates further on top of its 125 basis points of cuts over the past year, a move that would favor local debt. Philippine bonds, along with other local currency debt, are being sought by investors diversifying from US assets as the dollar weakens in the face of President Donald Trump's tariffs. The Southeast Asian nation's bonds have an edge due to its minimal correlation with Treasuries, which are facing pressure due to US fiscal concerns. 'We have a constructive view on Philippine government bonds, given our views on the inflation outlook,' said Leonard Kwan, a Hong Kong-based portfolio manager at T. Rowe Price Group Inc. Their 'de-correlated profile' to Treasuries is another draw for investors, he said. Benchmark 10-year yields in the Philippines have risen 10 basis points this year to 6.28%, while nearly all other emerging Asian yields on similar tenors have fallen in that period. Peso bonds underperformed amid wider budget deficit expectations and the impact of an earlier rise in oil prices. However, inflation undershooting BSP's 2%-4% target for four straight months has positioned Philippine bonds for gains. The local policy rate after adjusting for recent inflation now stands at 385 basis points, the most in emerging Asia, giving the BSP a greater leeway to cut rates. The dovish wagers are starting to show up in market forecasts, with the Philippine 10-year yield estimated to fall to 5.67% by year-end, according to a median of economists surveyed by Bloomberg. That level was last seen in October 2024. Peso bonds are also likely to be more shielded from any losses in US debt as concern over the fiscal deficit and uncertainties over further Federal Reserve rate cuts unsettle markets. The 120-day correlation between 10-year Philippine bonds and Treasuries stands around 0.10, according to Bloomberg calculations, signaling that both assets hardly move in lockstep. Investors are also watching if JPMorgan Chase & Co. would include Philippine debt into its local-currency emerging-market debt index this year. Citigroup Inc. sees the inclusion of Philippine bonds in global indexes providing another tailwind for the nation's bonds, strategists Gordon Goh and Rohit Garg wrote in a note on Monday. They also recommended maintaining a long currency-hedged position in 10-year Philippine government bonds on expectations of further policy rate cuts and disinflation pressure. More stories like this are available on
The Star
22-07-2025
- Business
- The Star
T Rowe favours Thailand, Malaysia bonds on scope for rate cuts
T. Rowe Price Group Inc. likes local bonds in Thailand and Malaysia, betting that further monetary easing will outweigh currency gains as a key driver of investor returns. Malaysia's central bank has potential to deliver several more interest rate cuts after its first policy easing in five years earlier this month, while persistent deflation in Thailand should extend support for its debt despite already-low yields, said Leonard Kwan, a Hong Kong-based portfolio manager at the US asset manager. Kwan, who manages the firm's Emerging Markets Bond Strategy fund, added he prefers medium-term Thai bonds and longer-dated notes in Malaysia. The fund had assets worth $581 million as of June 30. Tailwinds from the dollar's weakness against the Asian currencies will be "less powerful than what we saw year to date,' Kwan said. He expects a "consolidative period for the dollar over the next three to six months' as bearish wagers on the greenback appear excessive. Kwan's comments signal a rethink among investors as the dollar has rebounded in the past two weeks, clawing back some of this year's steep losses as fresh inflation data cast doubts on the outlook of US rate cuts. Meanwhile, signs of strong consumption and a resilient labor market also helped ease concerns about a tariff-induced recession and a sustained decline of American exceptionalism. Despite the latest gain, the Bloomberg Dollar Spot Index is down 8% this year. Joining a broader Asian currency rally against the greenback, both the Thai baht and Malaysian ringgit have risen over 5% since 2025 began. The currency gains have been a key catalyst of the performance of the two nations' local-currency bonds. Thai debt has generated year-to-date total returns of 13.8% this year, with 10.2% for their Malaysian counterpart, Bloomberg data show. Elsewhere in the region, Kwan said he also likes Indonesian bonds of medium-term maturities, as the firm sees another two-to-three 25-basis-point rate cuts in Southeast Asia's biggest economy. The Indonesian rupiah, in contrast, is Asia's worst-performing currency this year, down 1.3% versus the dollar. - Bloomberg
Business Times
22-07-2025
- Business
- Business Times
T Rowe favours Thailand, Malaysia bonds on scope for rate cuts
[NEW YORK/SINGAPORE] T Rowe Price Group likes local bonds in Thailand and Malaysia, betting that further monetary easing will outweigh currency gains as a key driver of investor returns. Malaysia's central bank has potential to deliver several more interest rate cuts after its first policy easing in five years earlier this month, while persistent deflation in Thailand should extend support for its debt despite already-low yields, said Leonard Kwan, a Hong Kong-based portfolio manager at the US asset manager. Kwan, who manages the firm's Emerging Markets Bond Strategy fund, added he prefers medium-term Thai bonds and longer-dated notes in Malaysia. The fund had assets worth US$581 million as at Jun 30. Tailwinds from the US dollar's weakness against the Asian currencies will be 'less powerful than what we saw year to date', Kwan said. He expects a 'consolidative period for the US dollar over the next three to six months' as bearish wagers on the greenback appear excessive. Kwan's comments signal a rethink among investors as the US dollar has rebounded in the past two weeks, clawing back some of this year's steep losses as fresh inflation data cast doubts on the outlook of US rate cuts. A NEWSLETTER FOR YOU Friday, 8.30 am Asean Business Business insights centering on South-east Asia's fast-growing economies. Sign Up Sign Up Meanwhile, signs of strong consumption and a resilient labour market also helped ease concerns about a tariff-induced recession and a sustained decline of American exceptionalism. Despite the latest gain, the Bloomberg Dollar Spot Index is down 8 per cent this year. Joining a broader Asian currency rally against the greenback, both the Thai baht and Malaysian ringgit have risen over 5 per cent since 2025 began. The currency gains have been a key catalyst of the performance of the two nations' local-currency bonds. Thai debt has generated year-to-date total returns of 13.8 per cent this year, with 10.2 per cent for their Malaysian counterpart, Bloomberg data show. Elsewhere in the region, Kwan said he also likes Indonesian bonds of medium-term maturities, as the firm sees another two-to-three 25-basis-point rate cuts in South-east Asia's biggest economy. The Indonesian rupiah, in contrast, is Asia's worst-performing currency this year, down 1.3 per cent versus the US dollar. BLOOMBERG
