Dato' Lee Kok Kwan, Chairman of BIX Malaysia, the Bond and Sukuk Information Exchange Malaysia, spoke with Bonds & Loans about the sukuk pipeline for the coming year, growing demand for Sharia-compliant instruments, and Malaysia’s innovative approach to Islamic finance.
The recent announcement that Chinese government bonds (CGBs) and policy bank bonds will be included in the Bloomberg Barclay’s Global Aggregate (Global Agg) Index marks a huge milestone in China’s gradual integration into global markets. Not only does index inclusion herald the beginning of an influx of foreign investment, but it has the potential to mould credit markets across the region.
With spreads on record volumes of bonds issued by China’s real estate developers widening to near 2009 levels and a softening of the Chinese economy taking hold, some analysts have raised alarm bells – even going so far as to question whether a bubble, which some allege to be brewing, or other big shock to the sector could catalyse the next financial crisis. There is, however, good reason to believe those fears are overblown.
In an exclusive interview with Bonds & Loans, Joe Delvaux, Senior Fund Manager at Duet Asset Management, delves into frontier markets, assessing their performance in 2018, providing insight into investor sentiment on broader EM assets, and takes a glimpse into what 2019 might bring.
Despite a series of measures introduced by the Indonesian authorities, including six benchmark rate hikes in a year and improved hedging tools, the rupiah has continued to suffer from souring sentiment towards emerging markets. As a result, local banks and corporates are facing increasingly limited funding opportunities, even as Indonesia’s bond market expands at record pace following the sovereign’s upgrade to investment grade in 2017.
The spate of trade tariffs introduced by US President Donald Trump’s administration against China in 2018 were a natural manifestation of his anti-globalist agenda and represented one of the first steps towards his long-standing pledge to “Make America Great Again”. But the retrenchment of the US has forced its long-standing allies to rethink their bilateral relationships and search for new “marriages of convenience” across the global economic and geopolitical landscape – a dynamic that is already influencing global markets, trade routes and investment flows.
With its substantial renewable energy ambitions telegraphed for years, industry practitioners often cite India as a potential major driver for the development of the sustainable finance and green bond segments among its emerging market peers. We speak with Vinod Kothari, a Kolkata-based structured finance advisor about why green bond volumes in India are down year-on-year, and the segments likely to drive issuance in the following financial year.
Asia remains one of the leading regions for climate bond issuance in emerging markets globally, driven by both strong political will to transition towards a cleaner economy and, more fundamentally, a deep need for long-term infrastructure investment. We speak with Shyam Saraf, Director, DCM at MUFG, about how Asia’s climate bond sector is evolving to tackle the infrastructure gap.
Despite its reputation as a heavy emitter of greenhouse gasses, Indonesia’s green sukuk was hailed as a game changer for both Islamic and ESG investing. Luky Alfirman, Director General of Budget Financing and Risk Management, Ministry of Finance in Indonesia believes its inaugural transaction in February is the first of many to come as the government looks to double down on its commitment to climate change mitigation.
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