Asia Bond Watch: Hard or local currency bonds?

Kheng-Siang Ng

Asian local currency government bonds, as measured by the Markit iBoxx ABF Pan-Asia Unhedged Total Return Index, delivered 10% returns in 2017 but lost ground in the six-month period to the end of June this year at -2%¹. Similarly, Asian hard currency government bonds, as measured by the J.P. Morgan JACI Sovereigns Total Return Index, returned 9% last year but have underperformed local currency markets in the first half of 2018, recording a negative return of -5%².