Asian Bonds Experience Surge in Foreign Investments

Asian bonds experienced a significant turnaround in October, with foreign investors pouring $368 million into markets in Indonesia, Malaysia, Thailand, India, and South Korea. This influx of funds marked a stark reversal from the previous month, which saw net sales of $5.48 billion. The renewed interest in the region was fueled by an improved growth outlook and a series of trade agreements between the United States and countries in Southeast Asia.

President Donald Trump’s signing of reciprocal trade deals with Malaysia and Cambodia, as well as a framework pact with Thailand aimed at addressing trade barriers, helped boost investor sentiment. According to Khoon Goh, the head of Asia research at ANZ, factors such as better-than-expected growth, optimism surrounding artificial intelligence, and easing trade tensions played a significant role in driving the increased inflows into the region.

Malaysian bonds emerged as a particularly attractive option for investors, receiving $1.05 billion in foreign inflows – the largest monthly amount since May. The country’s GDP growth of 5.2% in the July-September period, supported by strong domestic demand and a rebound in exports, despite U.S. tariffs, contributed to investor confidence.

Similarly, Thai and Indian bonds also saw substantial foreign inflows of $1.04 billion and $397 million, respectively, in October. However, Indonesian and South Korean bonds experienced outflows of $2 billion and $125 million, respectively, during the same period.

Looking ahead, Goh remains optimistic about the region’s prospects, citing resilient growth momentum and robust export demand as key factors that are likely to support continued inflows in the coming months. With the year coming to a close, Asian markets are poised to attract further cross-border investments as investors capitalize on the improving economic conditions and trade relations in the region.