Emerging-Market bonds have edge over stocks on Covid-19 risks

Students returning from China being checked by medical assistants during a health screening at Kolej Tun Ahmad Zaidi 10th College) in University Malaya. Emerging-market local-currency bonds especially in Asean countries should continue to prove more resilient than their equity counterparts amid the Covid-19 (coronavirus) outbreak thanks to proactive monetary policy and uncertainty over corporate earnings, according to market participants. - The Star/ANN

KUALA LUMPUR/SINGAPORE: Emerging-market local-currency bonds especially in Asean countries should continue to prove more resilient than their equity counterparts amid the Covid-19 (coronavirus) outbreak thanks to proactive monetary policy and uncertainty over corporate earnings, according to market participants.

Central banks have been quick to act to the virus threat, with Malaysia, Thailand and the Philippines cutting interest rates, and Singapore and Indonesia providing dovish forward guidance. That’s helped boost developing nation bonds, while equities have remained under pressure as analysts lower profit forecasts.