每日时讯英文阅读：Asia wakes up to new reality
This article suggested a new-style. product, "real rate" or inflation-linked fund, it's still "new" to asian countries, in spite of their popularity in Latin America, the US and UK. And it would be a new asset in our portfolio in the coming future. Investors especially our finacial planners should take an eye on it.
Asia wakes up to new reality
By Andrew Wood in Hong Kong
Wednesday, July 16, 2008
Inflation has taken Asia by surprise. In Singapore, one of the region's most fiscally conservative countries, prices are rising at their fastest rate in 26 years. Inflation in China is near an 11-year high. Rice, the staple of many Asian diets, has tripled in price this year.
Central banks wait nervously to see if self-fulfilling expectations of a sustained acceleration in prices triggered by higher food costs and surging crude have taken hold. So how are fund managers in the region responding with products to help nervous investors protect their money?
"Inflation is the one thing that can break down a society. It's effectively wealth destruction," says David Lynne, head of global rates for Deutsche Bank in Singapore.
Until relatively recently, there was little need for "real rate" investments as prices were stable, and there was little demand for them as the pensions industry in Asia was under-developed.
Deutsche Bank says that, apart from India, Indonesia and the Philippines, inflation in Asian economies has averaged 3 per cent a year or less over the past decade. However average inflation is now significantly above trend in China, Hong Kong, South Korea, Singapore, Taiwan and Thailand. "We have been in a low inflation environment in Asia for the last five to seven years. Prices have been kept down by flexible labour markets, currency appreciation and great increases in productivity. [But now] we are seeing a lot of inquiries about buying inflation-protected products," says Mr Lynne.
In a sign of the times, DWS Investments, the mutual fund brand of Deutsche's asset management division, will launch its Global Inflation Buster range of retail products this week in Hong Kong.
Meanwhile, HSBC has already attracted $100m of retail subscriptions for what the bank says is Hong Kong's first authorised emerging markets inflation-linked bond fund, which it launched last month.
While that is a relatively limited amount of money, Patrice Conxicoeur, who heads the Hong Kong office of Sinopia, noted that it came as net flows into Hong Kong funds had dropped to about a quarter of their level from a year ago.
Furthermore, he argued, "we have quite a bit of education to do, especially with Asia, where inflation is now a reality but a new reality that has not sunk in yet".
Japan and South Korea are the only two Asian countries that have issued inflation-linked bonds to date, in spite of their popularity in Latin America, the US and UK. The lack of such bonds in Asia may worsen inflation, some analysts say, as investors tend to rush into commodity funds if prices look like they may get out of control.
Traditionally the Asian approach to retirement has been to buy a house and let your children look after you. In Singapore, one of the biggest supporters of Confucian-style. "Asian values", the authorities even allow elderly parents to sue children who refuse to support them.
"But there's generational change" says Mr Lynne. The traditional model of family care is under threat. "Not all children are willing to do that. And there's geographical change too, like in China where people have moved from the country to the cities on the eastern seaboard." That, he says, is boosting the pension industry across the region.
Asia's growing retirement savings industry is likely to follow the example of counterparts in the west and buy real-rate annuities, especially if inflation persists.
For now, few governments in Asia seem ready to issue inflation-linked securities. So Mr Lynne says another approach is to look abroad. "[Inflation in] export-led economies has a close correlation with G3 economies [US, Japan and European Union]," he says, suggesting investors in places like Singapore or Hong Kong could buy a basket of inflation-linked bonds or swaps from Japan, Europe and the US that replicate inflation conditions in their home country.
This approach also shows promise for investors living in China, South Korea, Taiwan and Thailand, he says. However, Deutsche Bank research suggests investors in those countries at best could only hedge around 40-50 per cent of their inflation exposure through G3 inflation-linked swaps.
Mr Lynne thinks there is potential for an inflation-linked derivative market in Asia. The demand for inflation protection is likely to grow as pension funds and insurance companies in the region need to offset long-term liabilities with long-dated assets. At the same time, infrastructure investment is growing. The World Bank estimates that Asia will spend at least $1,000bn on such projects over the next five years.
Builders of toll roads need to calculate the impact inflation will have on their earnings for the period in which they may operate the road - typically between 20 and 30 years. To allow for unforeseen spikes in inflation, developers typically price in higher-than-expected levels of inflation as a hedge.
"By entering into an over-the-counter inflation swap, developers can lock in a rate of inflation by paying a fixed rate plus a predetermined level of inflation and receiving a fixed rate payment in return," Mr Lynne says. "This certainty can help developers reduce their overall project costs, increase cash-flow and potentially brings a competitive advantage to the tender process."
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发布于2008-07-16 19:16:22
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