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2013.06.0404:52:00UTC+00Research: Outlook for Em Asia Rates Market

Quotes from Barclays Capital:

-Selling pressures increased in Asean markets yesterday - particularly in Thailand (10y up 16bp), but also in Malaysia and Indonesia. In contrast, markets in North Asia were stable, with Indian, Korean and Chinese bonds showing low volatility. What separates these markets is the presence of global benchmarked investors in the former, and the dominance of local institutions in the latter.

-The damage in global EM markets, both in terms of FX and yield performance, has been concentrated in LatAm and EEMEA. Therefore, we think Asian markets currently are hardly a priority for global portfolio managers.

-That also probably means that any market turnaround and buying flows will also materialise first in those regions, with Asean markets following with a lag. Until such flows materialise, we recommend cautious positioning. On a relative value basis, we think ThaiGBs are likely to attract inflows first if global sentiment improves. 

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