A surge in demand for Sri Lanka’s latest US dollar bond issue is putting a spotlight on the appetite for emerging-market securities, even amid the US Federal Reserve’s tightening campaign.
The South Asian nation garnered more than US$11 billion of orders for the US$1.5 billion of 10-year notes it sold last week, marking a quadrupling in demand compared with its US dollar debt issuance in 2015 and last year.
Chinese banks participated in arranging the sale for the first time, underscoring Sri Lanka’s deepening ties with Asia’s biggest economy.
Photo: AP
Strategically located along the maritime Silk Road route championed by Chinese President Xi Jinping (習近平), Sri Lanka is also benefiting from Chinese demand for investments linked to Beijing’s “One Belt, One Road” development initiative.
Three people involved in the bond sale noted the presence of Chinese buyers in the allocation.
Since Xi introduced the Silk Road initiative in 2013, China has invested more than US$50 billion in “One Belt, One Road” nations to develop new land and sea trade links with Asia, Europe and Africa, according to a report by Xinhua news agency.
Credit Suisse Group AG analysts expect China to pour more than US$500 billion into the efforts.
China is hosting a summit on the project on Sunday and Monday.
Other Asia-Pacific nations have also sought to tap the dollar bond market, with Mongolia issuing in March and a debut issue by Papua New Guinea mooted for this year.
Emerging-market bonds have continued to thrive even after the Fed began accelerating the pace of rate hikes over the past half year, lifting its benchmark by 0.25 percentage points in December last year and in March. The central bank is expected to move again next month.
Flows to emerging-market bond funds rose to more than US$2.5 billion in the week to May 3, a 14th week of net gains, according to data compiled by consultancy EPFR Global.
Inflows to hard-currency developing-nation debt funds total US$16.7 billion so far this year.
Chinese demand “is certainly positive if it means that these frontier countries can tap into a more diversified investor base,” said Mark Baker, investment director for emerging-market fixed income at Standard Life Investments Ltd in Hong Kong.
However, he was concerned about Sri Lanka’s “lackluster” exports and expensive currency.
“We are surprised by how tight credit spreads have now reached relative to its fundamentals,” said Baker, who stayed out of the Sri Lanka issue.
He already had some of the nation’s outstanding dollar bonds and is now “reassessing” his holdings, he said.
Among the rows of vibrators, rubber torsos and leather harnesses at a Chinese sex toys exhibition in Shanghai this weekend, the beginnings of an artificial intelligence (AI)-driven shift in the industry quietly pulsed. China manufactures about 70 percent of the world’s sex toys, most of it the “hardware” on display at the fair — whether that be technicolor tentacled dildos or hyper-realistic personalized silicone dolls. Yet smart toys have been rising in popularity for some time. Many major European and US brands already offer tech-enhanced products that can enable long-distance love, monitor well-being and even bring people one step closer to
Malaysia’s leader yesterday announced plans to build a massive semiconductor design park, aiming to boost the Southeast Asian nation’s role in the global chip industry. A prominent player in the semiconductor industry for decades, Malaysia accounts for an estimated 13 percent of global back-end manufacturing, according to German tech giant Bosch. Now it wants to go beyond production and emerge as a chip design powerhouse too, Malaysian Prime Minister Anwar Ibrahim said. “I am pleased to announce the largest IC (integrated circuit) Design Park in Southeast Asia, that will house world-class anchor tenants and collaborate with global companies such as Arm [Holdings PLC],”
TRANSFORMATION: Taiwan is now home to the largest Google hardware research and development center outside of the US, thanks to the nation’s economic policies President Tsai Ing-wen (蔡英文) yesterday attended an event marking the opening of Google’s second hardware research and development (R&D) office in Taiwan, which was held at New Taipei City’s Banciao District (板橋). This signals Taiwan’s transformation into the world’s largest Google hardware research and development center outside of the US, validating the nation’s economic policy in the past eight years, she said. The “five plus two” innovative industries policy, “six core strategic industries” initiative and infrastructure projects have grown the national industry and established resilient supply chains that withstood the COVID-19 pandemic, Tsai said. Taiwan has improved investment conditions of the domestic economy
Sales in the retail, and food and beverage sectors last month continued to rise, increasing 0.7 percent and 13.6 percent respectively from a year earlier, setting record highs for the month of March, the Ministry of Economic Affairs said yesterday. Sales in the wholesale sector also grew last month by 4.6 annually, mainly due to the business opportunities for emerging applications related to artificial intelligence (AI) and high-performance computing technologies, the ministry said in a report. The ministry forecast that retail, and food and beverage sales this month would retain their growth momentum as the former would benefit from Tomb Sweeping Day