Asian bonds faced in September their heaviest foreign selling pressure in more than six years, as a sharp rise in US Treasury yields and renewed Federal Reserve tightening blunted investors' appetite for emerging-market debt.
Foreigners sold a net $8.21 billion of regional bonds in India, Indonesia, Malaysia, South Korea and Thailand, for their largest monthly net withdrawal since the $17.28 billion sold in March 2020, data from regulators and bond market bodies showed.
The overseas capital outflow from regional bonds came in addition to an outgo of about $23.49 billion from regional equities.
"The broad-based weakness suggests a more cautious global risk environment, with investors reducing exposure across both asset classes, as the Fed tightening cycle starts and global bond yields rise, amid elevated oil prices," said Khoon Goh, the head of Asia research at ANZ.
"Debt outflows across the region show the impact that higher global bond yields are having," ANZ's Goh said.
The benchmark US 10-year Treasury yield surged 53.5 basis points in September and hit a 24-1/2-year high of 5.3645% on concerns that high oil prices could fuel inflation, bolstering expectations of further rate hikes by major central banks.
The U.S. Fed raised interest rates last month and signalled more hikes in the coming months.
Foreign investors offloaded about $6.3 billion in South Korean bonds last month, for their largest monthly net sales since divestments of $7.25 billion in March.
Thai, Indian, Malaysian and Indonesian bonds also saw foreign outflows of $822 million, $548 million, $436 million and $100 million, respectively. - Reuters
