Buy-and-hold strategy in Asian bonds creates resilience

THE Asian bond market is likely to be more resilient than the global markets - despite it being less liquid - because bond investors in the region tend to buy bonds and hold them to maturity, the Monetary Authority of Singapore (MAS) said on Thursday.

The central bank's report comes after a puzzling "flash crash" in the bond market on Oct 15, when the yield on the benchmark 10-year US government bond dropped 33 basis points to 1.86 per cent in just about five minutes. That rare incident was expected to occur once every 1.6 billion years, said a Financial Times report.

"Policymakers and market participants are growing concerned that sudden redemptions from high-yield bond funds could trigger a larger sell-off in the illiquid and increasingly-crowded high-yield bond market," MAS said in its financial stability review.