May 18 Reuters Emerging Asia exChina bonds witnessed foreign outflows for a second straight month in April, due to higher U.S. yields and concerns over strict coronavirus lockdowns in China.
Overseas invesstors disposed a combined net total of 2.35 billion in South Korea, Thai, Indian, Indonesian and Malaysian bonds last month, data from regulatory authorities and bond market associations showed. It was the second consecutive monthly selling by foreigners in Asian bonds, according to the data.
Yields of 10year U.S. government bonds have risen sharply in the past month, on expectations that the Federal Reserve would act aggressively to tame soaring inflation levels.
Fed hiked its benchmark overnight interest rate by 50 basis points this month and announced it would begin to trim its balance sheet next month to counter unabated inflation.
The Ukraine conflict and an increasingly hawkish U.S. Federal Reserve were the main drivers of the outflows, given sharply weaker global risk sentiment and higher USD cost of funds, said Jennifer Kusuma, senior rates strategist at ANZ.
We expect outflows from the emerging Asia region to continue, although most economies possess robust fundamentals and FX reserves to withstand increased volatility.
Foreigners sold Indonesian bonds worth 1.41 billion, while Indian and Malaysian bonds faced outflows of 579 million and 503 million, respectively.
Indonesia and India faced a big surge in consumer prices in April as food and energy…