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Asian Dollar Bond Monitor: New Normal or Late-Summer Night Dream

We revisited the Asian US Dollar bond universe, following our original ADBM (dated 24-April-2017). Asian USD bond spreads have staged a come-back in August on a flight to quality on rising geopolitical tension with North Korea. We note that the recent performance has not been symmetrical across all countries. We have witnessed outperformance for Indonesia's and India's USD credits, both of which we have recommended, and a lacklustre performance on China's USD bonds on supply overhang and investor concerns over China's debt debacles.

In general, we expect investors to increase differentiation between China and ex-China bond universes. For the record, we believe the term "Asia" has been simply a convenient but wrong association to lump China, India, and Indonesia in one group in the first...

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