ADB – Asia Bond Monitor, Sep 2024

During the review period of June 1st to August 30th, financial conditions in emerging East Asia improved due to expected policy rate cuts in advanced economies and regional markets, along with a decline in bond yields. Despite initial market volatility in early August, financial conditions continued to improve. Regional financial indicators showed improved performance, with currencies appreciating against the US dollar and risk premiums narrowing. However, there were marginal losses in equity markets due to economic weaknesses in China. The outlook for regional financial conditions was seen as balanced, with potential risks including geopolitical concerns, weak economic performance in China, and trade tensions between the US and China. In the second quarter of 2024, the emerging East Asian local currency bond market expanded, with growth in both Treasury and corporate bonds outstanding. Treasury bonds increased due to issuance by the PRC to finance stimulus measures, while corporate bonds rose on increased issuance in several markets. ASEAN markets accounted for a significant portion of the region's total LCY bonds outstanding. Sustainable bond markets in ASEAN+3 also saw growth, outpacing the European Union and global markets, with a rebound in issuance in the second quarter. LCY-denominated sustainable bonds were prevalent in the region's issuance, with a majority financed by short-term maturities.