Asia needs to step up bond market development

Hong Kong, Nov 14 | Updated: Nov 15 2005, 06:14am hrs
Asia needs to be more aggressive in deepening its bond markets to absorb a massive savings surplus that will only rise as China tries to slow its investment growth, analysts and fund managers said on Monday. With Asians saving more than banks can advance via traditional loan markets, the region needed well-developed and liquid debt markets so it could utilise its surplus funds, they said at a bond conference in Hong Kong.

The saving surplus could have been less than what we are seeing if we have a deep bond market, said Andy Xie, head of Asia-Pacific Economics at Morgan Stanley. More savings can go to bond market, the cost of capital can decline and the investment rate could rise, he said.