According to the Asian Development Bank (ADB), Vietnam’s domestic bond market has recovered its momentum in the first quarter of 2019, with an increase of 0.7 percent in value of the domestic currency to $51.4 billion, after a decrease of 5.3 percent in the fourth quarter of 2018.
ADB said this growth was due to a hike in the balance of treasury bonds at 0.9 percent in the first quarter of 2019 to $47 billion, after a 6.1 percent decline in the fourth quarter of 2018. The government bond market also compensated for the 1.3 percent decrease in the corporate bond market in the first quarter of 2019.
The above information is published by ADB in the Asian Bond Monitoring report. ADB identified the local currency bond markets of the emerging East Asia region continuing to expand in the first quarter of 2019, despite of slowing trade conflicts and global growth.
ADB said that by the end of March, there were $15 trillion of domestic currency bonds circulating in emerging East Asian markets, 2.9 percent higher than the end of 2018 and 14 percent higher than the end of March 2018. Meanwhile, the value of issued bonds in the region increased to $1.4 trillion in the first quarter, 10 percent higher than the last quarter of 2018 when the release of debt instruments of government was stronger.
Emerging East Asian regions include China, Hong Kong, Indonesia, Korea, Malaysia, Philippines, Singapore, Thailand and Vietnam.
“Foreign investors were very optimistic with China in the first quarter of 2019 due to better economic growth than expected. Indonesia also attracted higher foreign direct investment, but the foreign holding rate in the Philippines dropped sharply as investors reclaimed profits. The uncertainty about the results of the general election has prompted the waiting and listening approach of foreign investors in Thailand, “ADB report pointed out.
In a special chapter, the report notes that the development of the housing bond market will increase access to home loans at a time when demand is increasing and diversifying financial resources for the housing previously provided by commercial banks. Housing finance may reduce the risk of an imbalance in terms of long-term loans between homeowners with short-term loans from banks.
The report states that the development of the housing bond market can help the countries mobilise capital to build more housing units, meeting increasing demand for housing while also contributing to growth and development through job creation.
“We see the potential in developing housing bonds to finance rising housing needs as rural areas move to urbanisation, as well as green bonds to fund energy and other climate-friendly projects, “said ADB Chief Economist, Yasuyuki Sawada.
