Ask The Experts: Credit Spreads and Credit Markets Offer Better Value in Fixed Income
Tony Adams, Co-Head of Global Fixed Interest and Credit at First State Investments, shares his outlook for fixed income in 2012 and discusses where he sees the most opportunities for investors.
Questions:
With interest rates at persistently low levels, how will this impact fixed income in 2012?
- Cautiously optimistic on fixed income outlook for 2012
- Negative impact should interest rates rise globally
- Credit spreads and credit markets offering attractive returns
Within fixed income, what are some of the factors that could support performance?
- Markets are currently priced for quite dire outcomes particularly for Europe
- Impact on export-driven economies also cause for concern
- Resolution in Europe will be catalyst for stronger performance
What are the risks fixed income investors should take note of?
- Immediate risks centre on Europe, especially Greece
- On a longer-term perspective, inflation risks will reduce real returns
With growing interest in the Asian fixed income space, what's the most/least attractive opportunity you see at the moment?
- Asian fixed income has performed well due to stronger balance sheets and strong economic growth
- Cautious on Korea due to supply risks
- Positive on state-owned enterprises in China and Hong Kong corporate
- Within Asian high-yields, preference for Chinese property and industrial companies
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