Asian bond markets have bright future<\/p>\n
SINGAPORE (Reuter): Asia's rapacious appetite for capital to
\nfund spending on infrastructure will transform the region's
\nfledgling government and corporate bond market into a dominant
\nworld force, senior financial executives said.<\/p>\n
Peter Seah, president and chief executive officer of Overseas
\nUnion Bank Ltd in Singapore, said Asia had one of the world's
\nhighest savings rates at around 35 percent of gross domestic
\nproduct, 60 percent higher than in the developed West.<\/p>\n
"But this is still far short of our capital demands," he told
\na meeting of political and business leaders from Asia and Europe.<\/p>\n
"The shortfall has been estimated at US$160 billion between
\n1993 and 1998 alone," Seah added.<\/p>\n
He said countries across Asia needed to mobilize capital to
\npay for water and power projects as well as essential
\ncommunications and transport.<\/p>\n
"But the speed of growth in Asia depends critically on its
\nability to mobilize capital," Seah said.<\/p>\n
"With the amount of infrastructure investment in the region
\nthere will be a growing demand for long-term bonds. I think the
\nAsian bond market will grow very rapidly in the next few years,
\nbut it is difficult to quantify the rise."<\/p>\n
Speaking on the same panel on mobilizing capital in East Asia,
\nTimothy Beardson, chairman of Crosby Financial Holdings in Hong
\nKong, said there would be a major change in the scale and type of
\ninvestors in the Asian bond market.<\/p>\n
"We anticipate a new corporate bond market in Asia as
\ncompanies raise funds," he said.<\/p>\n
"Investors in the past in Asia have tended to be individuals
\nwho wanted a short-term equity return, but long-term investors
\nsuch as pension funds are now beginning to move into the market.
\nThey want long-term investments and a 10-year bond is ideal."<\/p>\n
He predicted that the demand for foreign funds would
\nnecessitate the lowering of barriers to investment in government
\ninfrastructure projects.<\/p>\n
"We are going to see that countries will need to make changes
\nin order to raise capital," he said. "What we are now beginning
\nto see is the primacy of economics over politics."<\/p>\n
The chairman of Malaysia's Securities Commission, Munir Majid,
\ntold the gathering a lack of over-the-counter capital markets of
\nany significant size had hampered the development of Asian bond
\nmarkets outside Japan, but added this situation was changing very
\nrapidly.<\/p>\n
"The development of secondary markets is a challenge," Majid
\nsaid. "People have to know they can get in and get out when they
\nwant to," he said.<\/p>",
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"sponsor": "Okusi Associates",
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