Trader bond

- A + A (June 30): Valuations are starting to turn attractive for South Korea bonds amid signs the market has overpriced how much the most hawkish central bank in emerging Asia may raise rates. Won forward rates are pricing in about 125 basis points of hikes over the next six months, far above economists’ forecasts for how much the Bank of Korea will move. This points to an improving environment for won bonds, the biggest loser among emerging-Asia’s sovereign debt this quarter as inflation quickened to a 14-year high and bets on rate increases jumped. Increased flows into Korean debt may help ease pressures on the won, which last week reached a 13-year low. The country is vulnerable to soaring imports exacerbated by a weak currency. It also means that Korean bonds may start to diverge from other emerging markets in Asia, where the risk of interest-rate swaps and yields moving higher is clouding the outlook. “We see value in Korean government bonds, as the market … [Read more...] about Bond traders bet market has swung too far on Korea rate hikes

PETALING JAYA: Foreign flows into the local bond market returned to positive territory in May amid foreign investors’ flight-to-safety demand and Bank Negara’s hawkish pivot. Nevertheless, the magnitude was only a meager RM531mil, which did not completely offset the relative net foreign outflows of RM2.2bil in April. Total cumulative foreign holdings in the local bond market grew to RM911.1mil for the first five months of 2022, following the net foreign inflows. Notwithstanding this, they were significantly lower than the cumulative net foreign inflows of RM25bil from January to May 2021, according to MARC Ratings Bhd. Total Malaysian Government Securities/Government Investment Issues (MGS and GII) outstanding expanded by 11.1% year-on-year (y-o-y) to RM947.3bil in May 2022 as there was no redemption of government bonds recorded. This is notwithstanding the reduced issuances in both the MGS (May: RM4.5bil; April: RM10bil) and GII (May: RM8bil; April: RM9.5bil) segments during … [Read more...] about Foreign flows into local bond market returns to positive territory

The good news is that yields in US Treasury securities may be near their peak. The bad news is that makes the recession I’ve been forecasting since February more likely. The current campaign by the US Federal Reserve to raise its main policy interest rate — the overnight federal funds rate — in response to rapid inflation normally precipitates a business downturn. Since the central bank adopted this measure in 1954, there have been 11 recessions, and only three exceptions, or soft landings — in 1966, 1984 and 1996. A soft landing occurs as the central bank lowers the funds rate after a series of increases with no recession unfolding. Until the Fed cuts rates, it’s uncertain as to whether its credit-tightening campaign is over or has merely paused. My analysis of post-World War II history reveals that a 100-basis-point rise in the funds rate is linked to a 36-basis-point rise in the 10-year Treasury note yield, and a 24-basis-point increase in the 30-year Treasury bond yield. … [Read more...] about Bond market rally signals an impending economic recession

The board of state-run Bank of Baroda (BoB) has approved raising up to Rs 5,000 crore through bonds in financial year 2022-23, a regulatory filing stated on June 27. The targeted amount would be raised in single or multiple tranches, the bank said, adding that it would be used for financing "infrastructure and affordable housing". "Board of Directors in their meeting held today has approved the proposal of raising of long term bonds for financing of infrastructure & affordable housing to the tune of Rs 5,000 crores in single or multiple tranches during financial year 2022-23," it informed the stock exchanges. "These bonds shall be senior, unsecured and will not form part of capital of the bank", the lender further noted. The shares of BoB closed at Rs 100 a piece at the NSE today, up 0.05 percent as compared to the previous day's close. Close The announcement of raising Rs 5,000 crore in FY23 comes days after the bank released its financial results for … [Read more...] about Bank of Baroda board approves raising up to Rs 5,000 crore in FY23

A screen in Hana Bank's trading room in central Seoul shows the Kospi closing at 2,322.64 points on Wednesday, down 45.35 points, or 1.91 percent, from the previous trading day. [YONHAP] Stocks plunged by almost 2 percent Thursday to slump for a second straight session amid recession woes and a dim outlook for the chipmaking sector. The won rose against the dollar. The Kospi retreated 45.35 points, or 1.91 percent, to close at 2,332.64 points. Trading volume was moderate at about 506 million shares worth some 8.7 trillion won ($6.7 billion), with losers outnumbering gainers 699 to 183. Institutional investors offloaded a net 321 billion won, and foreigners sold 234 billion won, while retail investors bought 521 billion won. Investors remained cautious after a near 2 percent fall on Wednesday, spooked by soaring inflation and weak economic sentiment data in the United States. Overnight, the central bank chiefs of major economies warned that the world's high inflation … [Read more...] about Stocks fall almost 2% for second straight session

- A + A KUALA LUMPUR (June 30): The Securities Commission Malaysia (SC) has launched a new sukuk framework to facilitate fundraising by companies in addressing sustainability concerns such as climate change or social agenda, with features that relate to the issuer’s sustainability performance commitments. The Sustainable and Responsible Investment (SRI)-linked Sukuk Framework is an extension of the initiatives under the SRI road map that was introduced in 2019 to broaden SRI product offerings, the SC said in a statement on Thursday (June 30). "More significantly, this initiative reflects the SC’s commitment to expanding the reach of the Islamic capital market (ICM) to the broader stakeholders of the economy and building an enabling ICM ecosystem for the sustainability agenda," added the regulatory agency. The SC said high-emitting industries are at high risk of being phased out with the accelerated shift towards developing a climate-resilient future. The … [Read more...] about SC launches new sukuk framework to facilitate companies’ transition to net zero

- A + A KUALA LUMPUR (June 30): Bank Negara Malaysia (BNM) must continue to cooperate with the Malaysian Anti-Corruption Commission (MACC) and the financial sector to coordinate efforts in combating corruption and financial scams. In making the call, MACC chief commissioner Tan Sri Azam Baki said this would also create public awareness that is more effective and appropriate in view of the latest scam tactics. According to him, besides ensuring more effective preventive measures by financial institutions, the efforts would provide support to recover the embezzled funds as well as enable effective investigations by the law enforcement agencies involved. “Financial institutions are always exposed to fraud and money laundering which make them a safe place or as a conduit to hide, deal and ‘clean’ the money from illegal activities. "The criminals are becoming more creative in finding the weaknesses to beat the customer due diligence that has been implemented, and … [Read more...] about BNM, MACC and financial sector must continue to cooperate to combat corruption, financial scams, says Azam Baki

This article first appeared in The Edge Malaysia Weekly, on June 20, 2022 - June 26, 2022. - A + A ALL eyes are on RHB Banking Group’s newly minted group managing director (MD) and group CEO Mohd Rashid Mohamad as he steers the fourth-largest banking group by assets forward in a tough operating landscape. “It’s very challenging, especially now in a fast-changing market environment, and as we face potential risks such as geopolitical and inflationary,” acknowledges Rashid in his first exclusive interview as group MD/CEO. Competition has intensified, given new entrants into the market, which are not just new banks but also technology companies that compete for the same pie. Rashid adds that this has partly affected the profitability of the industry, along with many other factors. He notes that banks globally no longer see “high ROEs” as before. For RHB Bank Bhd, its return on equity (ROE) in the past 10 financial years hit a high of 13.4% in FY2012 before … [Read more...] about Cover Story: RHB’s Game Plan in ‘fast-changing’ new normal

This article first appeared in The Edge Malaysia Weekly, on June 20, 2022 - June 26, 2022. - A + A NOT many civil servants appeared to be concerned that debt-laden 1Malaysia Development Bhd (1MDB) was already falling into the abyss in 2013, only a few years after it was established. Datuk Siti Zauyah Mohd Desa seemed to be one of the exceptions, as she had warned that Malaysia had never defaulted on a loan repayment and that even defaulting on a “low threshold” repayment of US$50 million would portray the country as bankrupt, never mind the colossal repayments needed for a US$3 billion loan that 1MDB was proposing to raise and be effectively backed by a government guarantee (GG). Now retired, the former deputy secretary-general at the Ministry of Finance (MoF) told the court last week that then prime minister Datuk Seri Najib Razak had ultimately agreed to the state-owned strategic investment company’s request for a government guarantee and that her … [Read more...] about 1MDB-Tanore Trial: Letter of comfort effectively became government guarantee despite MoF’s discomfort

This article first appeared in The Edge Malaysia Weekly, on June 20, 2022 - June 26, 2022. The Malaysian government is liable for the US$3 billion debt taken on by 1MDB GIL as Najib had signed the LOS - A + A BECAUSE 1Malaysia Development Bhd (1MDB) had direct access to former prime minister and finance minister Datuk Seri Najib Razak and his staff at the Prime Minister’s Office, the Ministry of Finance (MoF) and Minister of Finance Inc (MoF Inc) were often bypassed as the state-owned strategic investment company did not think there was any need to report to the ministry even though it was owned by MoF Inc, the High Court heard last week. Testifying as the 26th prosecution witness in Najib’s trial over the misappropriation of more than RM2 billion of 1MDB funds, Datuk Siti Zauyah Mohd Desa, a former deputy secretary-general (policy) at MoF, detailed how the government — specifically her ministry — was forced into issuing a letter of support (LOS) for … [Read more...] about 1MDB-Tanore Trial: 1MDB had direct line to Najib