ABSTRACT
We analyze and compare the investment attractiveness of nine Asian Local Currency Yield (LCY) bond markets 2005–2019. From the perspective of global investors, we consider and compare the ‘real return to risk’ ratio, duration, liquidity and the level of the liberalization of these bond markets. We show that the key determinants of the development of the Asian LCY bond markets are domestic credit to the private sector, the level of economic freedom and Moody’s sovereign credit rating. We show that in 2011–2019 in China, Malaysia, Indonesia and S. Korea, the average annual real return rate of the LCY corporate bond index exceeded that of the stock index. All the considered Asian LCY corporate bond markets demonstrated a positive annual average real return 2011–2019. We highlight Malaysia’s and Thailand’s bond markets due to their highest ‘real return to risk’ ratios in this period. The Malaysian corporate bond market is also characterized by a large share of long-term bonds and by the stable growth of information transparency, which increases its attractiveness for foreign investors. There are a number of risks of investing in Asian LCY corporate bond markets: the lack of credit risk hedging mechanisms, the low diversity of investor profiles and trade wars between China and the US.
