Singapore is leading the way to recovery in the Asia-Pacific region, according to Prebon Yamane’s latest Asian Sentiment Survey.
After hitting lows at the end of 1998, the recovery in trading volumes continues, with 36% of dealers predicting higher levels of activity in upcoming months, compared with only 8% who foresee a decline. Singapore tops the list of expected increases in trading of FX, fixed income and interest rate products.
Further evidence of a rebound in sentiment can be seen in the growth of counterparties. During the Asian financial crisis, dealing lines to many Asian financial institutions were cut and a number of international banks closed their trading desks in the region. According to the latest survey, this trend is set to reverse. A significant 38% of dealers foresee more counterparties in the next four months, against only 10% who expect the numbers to decrease.
Underpinning the recovery is an appetite for Asian debt issues, which is broadening to include more private sector debt, on the back of strong interest in Asian bonds and commercial paper.
Twenty-seven per cent of dealers surveyed expect interest rates in Asia to fall, while 52% predict that they will remain unchanged. Seventy-five per cent of dealers expect the majority of Asian currencies to remain at current levels or move gradually higher against the US dollar – with the exception of Hong Kong and China, because many believe the renminbi will be devalued.
The survey, commissioned by Prebon Yamane and conducted by independent research consultancy Conatus Ltd, polls leading bank treasury dealing desks around the region to measure changes in sentiment and expectations in Asia’s money and capital markets.