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Seeking cover? Scurry over to Asia's yield plays!

Tuesday, May 15, 2012 - 02:02

May 15 - Investors have been cutting back on their riskier holdings as they wait for raging global risks to settle down. But there are better assets to park your money in this maelstrom. Cathy Yang reports.

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Political risk rising in Europe. A possible Greek exit of the euro club among the biggest worries. China's economy also slowing and a last-minute triple-R cut, seen by most as a band-aid solution, merely fueling risk aversion. SOUNDBITE (English) REUTERS CORRESPONDENT, CATHY YANG, SAYING: "It couldn't be a more toxic combination for investors in Asia - a region heavily dependent on exports to the rest of the world. The risk-off sentiment has brought the regional index outside Japan this week to its lowest level in nearly four months." Metals, minerals and mining companies the major laggards in the MSCI Pan Asian stock index this week. But Adrian Mowat of JPMorgan recommends holding on to some China risk plays. SOUNDBITE (English) CHIEF ASIAN EMERGING MARKETS STRATEGIST, JP MORGAN ASSET MANAGEMENT'S, ADRIAN MOWAT SAYING: "The internet stocks, consumer staples are doing very well and the balance of the market has become very cheap because of people's macro concerns which are stuck in a trading range." Retail investors have been redeeming money from emerging markets equity funds for an 11th week running, says funds tracker EPFR. In contrast, emerging Markets bond funds took in over one billion dollars. Frances Cheung of Credit Agricole. SOUNDBITE (English) SENIOR STRATEGIST, CREDIT AGRICOLE, FRANCES CHEUNG, SAYING: "Even within the bond space, we have been observing some portfolio shift change from the developed world into Asia, more notably is the inflows into Chinese bonds and Korean bonds and indeed the Chinese bonds and Korean bonds are favored reserved diversification effort." One bright spot is the falling price of oil. Brent crude prices have fallen by 9 percent since early March, and cheaper oil could crank up demand in sputtering economies. Cathy Yang, Reuters.

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Seeking cover? Scurry over to Asia's yield plays!

Tuesday, May 15, 2012 - 02:02