# Asia remains an attractive market for both bonds and equities

- Link: https://www.thailand-business-news.com/india/158037-asia-still-a-good-hunting-ground-for-equities
- Published: 2024-08-27T11:48:00+07:00
- Author: Fujiko Takahashi

The Nomura Investment Forum Asia 2024 featured insights from Kwong Hong Huat of 
GIC on Japan’s resurgence in the equities market and from Vipul Mehta of Nomura 
Asset Management on the investment potential of India.

 * Japan’s equity market is experiencing a structural upturn driven by widespread
   corporate governance reforms and a return of inflation, making it an attractive
   investment opportunity.
 * India’s growing economy and stock market size present a unique investment opportunity,
   with the country expected to become the world’s third-largest economy by 2027.
 * The Asia ex-Japan region offers significant growth potential for investors, especially
   as money flows back to the region from the US, with India accounting for a substantial
   portion of the MSCI Asia ex-Japan Index.
 * The high-yield market in Asia is undergoing a structural shift away from real
   estate dominance, creating new opportunities for investors in higher-interest
   bonds with improving credit quality.

Japan’s comeback is attributed to reforms, increased profitability, and the exit
from deflation, with expectations of sustained structural upturn.

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India, seen as an attractive investment destination, boasts strong economic growth
and market potential, making it a compelling opportunity for foreign investors. 
This signals a shift in focus towards Asia, particularly India, from the US market,
which has dominated attention in recent years.

The perception of India as an expensive and high-risk market has kept foreign investors
away, but it is the fifth largest economy and one of the largest stock markets, 
with many money-making opportunities and sufficient liquidity and diversity. Domestic
investors have reaped the benefits, seeing positive flow every year except one over
the last 10 years.

Foreign investors will have to come back to India as it offers a unique opportunity
in terms of size, economy, population and potential for growth. India recorded GDP
growth of over 8% last financial year, exceeding growth rates in the US and China,
and is expected to become the world’s third-largest economy by 2027, with its GDP
forecast to hit $7 trillion by 2030. India’s share in the MSCI Asia ex-Japan Index
has increased from 8% in 2013 to 19-20% today, and foreign investors will have to
keep pace with the market and come back.

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## Asia’s high-yield bonds present a promising opportunity for investors

The Asian high-yield market is undergoing significant changes, with a shift away
from Chinese real estate dominance and towards improving credit quality among Asian
issuers. This shift is creating new investment opportunities, reflected in the strong
performance of the JP Morgan Asia non-investment grade index.

 * The high-yield market in Asia is undergoing a structural shift away from real
   estate dominance, creating new opportunities for investors in higher-interest
   bonds with improving credit quality.
 * The Asian high-yield market has shown significant recovery and strength, with
   a rise in new issuances and oversubscribed debt issues indicating strong investor
   demand.
 * Various sectors and markets in Asia, including India and China, offer compelling
   opportunities for generating credit alpha, driven by stable macroeconomic backdrops
   and government measures to stabilize key sectors.

Factors supporting the outlook for Asian high-yield include stable political environments,
strong credit fundamentals, and attractive yields compared to global credit markets.
Specific opportunities exist in sectors like Asian financials, insurance debt, and
the resilient Indian market. Government measures in China’s property and industrial
sectors, as well as robust macroeconomic backdrops in regional markets like Malaysia,
Indonesia, and the Philippines, are further contributing to the market’s recovery,
growth, and resilience. Overall, the Asian high-yield market presents a unique turnaround
story for investors seeking to capitalize on these evolving opportunities.