Asian bonds witnessed renewed cross-border inflows in October, reversing the sharp outflows seen in September. This shift was driven by an improved regional growth outlook and a series of U.S. trade agreements in Southeast Asia, which lifted investor sentiment.
Data from local regulatory authorities and bond market associations showed foreign investors bought a net $368 million of regional bonds across Indonesia, Malaysia, Thailand, India, and South Korea. This marks a significant turnaround from the $5.48 billion in net sales recorded the previous month. Key developments supporting the inflows include: – U.S. President Donald Trump signed reciprocal trade deals with Malaysia and Cambodia. – A framework pact was signed with Thailand aimed at addressing tariff and non-tariff barriers. “Better-than-expected growth momentum in most economies, artificial intelligence-related optimism and easing trade tensions were key drivers for increased flows into the region,” said Khoon Goh, head of Asia research at ANZ. Country-specific inflows for October were: – Malaysian bonds received $1.05 billion, the largest monthly foreign inflow since May. This was supported by GDP growth jumping to 5.2% in Q3, bolstered by domestic demand and a sharp recovery in exports. – Thai bonds attracted $1.04 billion in foreign inflows. – Indian bonds saw $397 million in foreign inflows. However, not all markets experienced inflows: – Foreign investors withdrew $2 billion from Indonesian bonds. – South Korean bonds saw outflows of $125 million. Looking ahead, ANZ’s Khoon Goh noted, “Resilient growth momentum and better-than-expected export demand should support continued inflows in the region heading into the end of the year.”