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Emerging-Market Bond Laggard Asia Is Primed for Rebound in 2023

  • Inflation has undershot forecasts in China, Indonesia, Taiwan
  • Foreign positioning in Asia is light, making room for inflows
Shoppers at Tanah Abang market in Jakarta, Indonesia.

Shoppers at Tanah Abang market in Jakarta, Indonesia.

Photographer: Dimas Ardian/Bloomberg
Updated on

Emerging Asian bonds have trailed their developing-nation peers this year, but a turning point looks to be just around the corner. 

Inflation pressures have begun to ease in many parts of the region, bringing forward predictions for a peak in interest rates. At the same time, positioning from overseas investors is historically light, leaving plenty of scope for inflows to increase. Finally, there’s growing optimism over an economic recovery in China into 2023, despite uncertainty over an increase in Covid protests.