Go local on emerging debt: Morgan Stanley

Singapore

SIX months after picking winners in Indonesia's rupiah and Malaysia's ringgit, Morgan Stanley's asset management arm is becoming bullish on the local-currency debt of developing nations.

Morgan Stanley Investment Management expects domestic sovereign bonds to outperform their dollar-denominated counterparts as a likely bottoming out of oil prices in the second quarter boosts demand for higher-yielding assets, said Jens Nystedt, the New York-based portfolio manager of emerging-market debt at the firm that oversees US$406 billion. Indonesian and Indian notes offer the highest interest rates among Asia's major economies and are attractive because their central banks have room to cut borrowing costs, he said.