Broadening the Investor Base for Local Currency Bonds in ASEAN+2 Countries

Date: May 2013
Type: Reports
Country:
Subject:
ISBN: 978-92-9254-065-4 (print), 978-92-9254-066-1 (web)
Price: US$24.00 (hardcopy)

Description

The Asian Development Bank (ADB) has been working closely with the Association of Southeast Asian Nations (ASEAN) and the People’s Republic of China (PRC), Japan, and the Republic of Korea—collectively known as ASEAN+3—to promote the development of local currency bond markets in the region through the Asian Bond Markets Initiative (ABMI). ABMI was launched in 2002 to help channel regional savings toward long-term investments within the region. ABMI was established with the goal of improving the resilience of the region’s financial systems by helping reduce the double mismatches (maturity and currency) of companies’ investment financing.

Since the launch of ABMI, local currency bond markets in the region have grown rapidly in recent decades in terms of size and diversity of issuers. This study was undertaken under ABMI and funded by the Government of Japan. It focuses on measures to expand the investor base for local currency bonds in ASEAN, the PRC, and the Republic of Korea, with the goal of generating greater variety in investment objectives and a wider range of investment strategies.

Findings

The experience with bond market development in ASEAN countries suggest a number of policy initiatives that can contribute to the expansion of the investor base for local currency bonds. In considering the options, it is important to recognize that reducing the concentration of the investor base may be at least as important as expanding its size.

Contents

  • Foreword
  • Abbreviations
  • Introduction
  • ASEAN Local Currency Bond Markets—Current State
  • Domestic Institutional Investors
  • Foreign Institutional Investors
  • Individual Investors, Domestic Mutual Funds, and Exchange-Traded Funds
  • Summary of Recommendations
  • Appendix: Bond Market Indices
  • References