ASIA ex-China bonds received their highest foreign money inflow in nine months in November on expectations then that the US Federal Reserve (Fed) would cut the pace of its interest rate hikes on signs of cooling inflation.

Overseas investors bought US$6.6 billion worth of bonds in India, Indonesia, Malaysia, South Korea and Thailand after withdrawing a net US$3.2 billion in the previous month, data from regulatory and bond market associations showed.

Last month, Thai and Indonesian bonds received an inflow of US$1.6 billion and US$1.5 billion, respectively, while South Korean bonds obtained US$562 million.

On the other hand, Indian and Philippine bonds had some minor outflows.

The five markets have seen a total outflow of US$4 billion between January and November this year, compared with a combined inflow of US$62.5 billion in 2021.

This year’s outflows came as the central banks in developed markets raised their interest rates aggressively to combat soaring inflation.

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The Fed has delivered 400 basis points (bps) of rate hikes and the European Central banks a record 250 bps.

The minutes from the Fed’s November policy meeting showed that most policymakers saw the need for a slowdown in rate hikes to counter the economic downtrend and maintain financial stability.

US consumers’ 12-month inflation expectations fell to 6.7 per cent, the lowest since September 2021, from 7.1 per cent last month, a recent Reuters poll showed on Wednesday (Dec 21). REUTERS