Vietnam was the fastest growing bond market in emerging East Asia during the first quarter of this year, according to a report from the Asian Development Bank (ADB).
Emerging East Asia is defined as China, Hong Kong (China), Indonesia, Republic of Korea, Malaysia, the Philippines, Singapore, Thailand, and Vietnam.
“Most emerging East Asia bond markets have regained their bounce,” said Iwan J. Azis, Head of the ADB’s Office of Regional Economic Integration, in the report released Wednesday.
In Vietnam, robust government bond issuance enabled its bond market to post the most rapid expansion in the region in the first quarter of this year, growing 23 percent over the previous quarter and 17.8 percent over the previous year to US$35 billion, a record high for the country.
Meanwhile, the corporate bond market contracted 12.6 percent on quarter and 43.1 percent on year to $600 million.
Despite the recent improvements, the Asia Bond Monitor report warns that emerging East Asia markets could still be jolted by the US' ongoing tapering of its quantitative easing program, a slowdown in China’s economic growth, or moves by the European Central Bank to counter the threat of deflation.
Only by taking the lead in implementing better regulation and oversight of the financial system can Asia mitigate these risks, the report said.
Bond yields – which fall as demand increases – declined in most economies in the first four months of this year, dropping most in Indonesia, Thailand, and Vietnam. However, investors in Thai bonds are now on the sidelines and yields could rise going forward.
Meanwhile, yields in the Philippines went up in January through April amid rising inflation.
The markets also continue to grow in size with $7.6 trillion in bonds outstanding in the nine economies at the end of March, up 2.1 percent on quarter and 9.5 percent higher than a year earlier.
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