The Federal Reserve ’s interest rate cut is about to land. According to the latest CME Fed Observation Tools, it is predicted that the Fed’ s possibility of raising 25 basis points in September is 55%, and the possibility of 50 basis points for interest rate cuts is 45%.

Data source: CME.GROUP, as of 2024.9.4, 8:30 in the Central Time District of the United States.Any point of view expressed in this document only reflects the point of view of the production time, and any predictions, expected or targets are for reference only, not any form of guarantee.The market is risky, and investment needs to be cautious.

Asian US dollar high -yield bonds are expected to benefit in the interest rate cut cycle due to the decline in financing costs and market risk preferences.From the perspective of the US 10 -year Treasury yield rate of 10 -year Treasury yields in the Federal Reserve, in terms of the 5 rounds of down -line cycles, there are 4 rounds of Asian US dollar high -yield bond indexes, and the average annualized return rate of 4 rounds is to12.03%.

Data source: Wind, 2005.12.31 (Bond index base date) -2024.8.31.The Asian US dollar high -yield bond index represents Markit Iboxx, the Asian US dollar high -yield bond index.Some interest rates are countless.Past performance does not mean the future, the market is risky, and investment needs to be cautious.

In this round of decline, from 2007 to 2008, the US subprime mortgage crisis triggered a tide of breach of contract, which led to a significant decline in the Asian US dollar high-income bond index.It can be seen that although it is in the cycle that benefits from the Federal Reserve's interest rate cuts, the impact of the risk of breach of contract on high -income bonds is greater.

So what are the risks of the current default of Asian high -yield bonds, what risks of the future, is it worth investing in?

The default rate in 2023 has declined significantly

Historically, the Asian US dollar high -yield debt has experienced three obvious waves of default. Judging from the past trends of breach of contract, in 1998, 2009, and 2022, a phased high point appeared.After the high in 1998 and 2009, for a long time, the default rate was at a lower level.In 2023, the default rate of high -yield bonds in Asia has decreased significantly over the past few years.

High -income enterprise bond annual default rate

Data source: S & P rating, 1993-2023, red is a high-income bond in Asia.Past performance does not mean the future, the market is risky, and investment needs to be cautious.

After the tide of breach of contract, companies with poor fundamentals may have been clearedUdabur Stock. With the recovery of the economy and the rise of market preferences, most of the remaining high -quality companies are expected to improve, and credit spreads have room for narrowing.Judging from the past performance, in addition to the high default rate, the Asian US dollar high -yield bond index has become an upward trend as a whole. As of 2024.8.31, the cumulative yield has been 156.2%since the base date. Since the low on October 31, 2008, the lower day, since the low on October 31, 2008, the low on October 31, 2008The index rose 254.73%; since the phased low on November 4, 2022, the index rose 42.57%.

Data source: Wind, 2005.12.31 (Bond index base date) -2024.8.31.The Asian US dollar high -yield bond index represents Markit Iboxx, the Asian US dollar high -yield bond index.Past performance does not mean the future, the market is risky, and investment needs to be cautious.

Potential breach of contract risk is reduced

In terms of fundamental perspective, Asia's economic growth is strong, and the company's fundamentals are gradually improved. At the same time, the improvement of the liquidity of the asset market will also help its financing.For example, the current US dollar in India and Indonesia is relatively high, and financing is relatively cheap. After borrowing money locally, many companies will redeem US dollar bonds issued overseas in advance.Against this background, the risk of high -yield bonds has decreased, and the narrowing of credit spreads also has a good impact, which has a large positive effect on bond returns.

On the other hand, the combination of the Asian high -income index is more diversified and risks have been scattered.In the past three or four years, Asia has a high default rate of high income, which has been dragged down by real estate in private enterprises in India.At present, India's real estate accounts for a significant decline in the proportion of high -yielding bond indexes, from 2020 accounted for nearly 40%of the index to about 5%at the end of September 2023.In other words, some Indian real estate developers are no longer in the index after breach of the contract in the past two or three years. Indian real estate developers in the Asian high -yield bond index are all companies with good texture, and they are relatively good in assets and liabilities.

At present, the Asian high -income index is mainly distributed in Mainland Finance, India and Macau consumer industry, India and Hong Kong Finance. In addition, they can also invest in other regions, such as India, Indonesia, Thailand, the Philippines.Essence

Source: Morgan Chase, HSBC Investment Management, September 2023.Investment involves risk.Past performance is not an indicator of future performance.For explanation only.

As of September 30, 2020 and September 30, 2023, JP Morgan Chase Asia Credit Non -Investment Level Index.

Other Indian companies do not include Indian public institutions in the chart.Other Indian companies do not include real estate and companies in Mainland India in the charts.Other Indian companies do not include Indian public institutions as shown in the figure.Other Hong Kong companies do not include Hong Kong Finance and Hong Kong Real Estate, as shown in the figure.

Follow the risk of decline in the United States

Recently, the ISM manufacturing PMI in the United States in August recorded 47.2, which was lower than the expected 47.5, which was higher than the previous value of 46.8; the new order index of the ISM manufacturing industry in the United States fell to the lowest since May 2023.Both PMI and the construction expenditure data in July were not as good as expected, and the market reinstated the economy to slow down concerns.Although the US economic recession is expected to be tapped repeatedly, at present, the market still agrees that the possibility of soft landing in the US economy is greater.Of course, the probability of soft landing also needs to continue to track and dynamically verify the changes in data indicators.

If we judge through scenario analysis, the impact of US decline risk on Asia's high -yield debt may be limited:

If the US economy is hard, it may not affect the expansion of the credit spread of high -yield bonds in Asia, but the impact may be limited.However, the current Asia, especially some Southeast Asian countries, has continued to rise in the past few years, and the quality of companies issuing US dollar bonds has continued to improve.In this case, the decline in the United States has certain risks to them, but their ability to resist risks is also increasing.

If the US economy is softened, the credit spread of the Asian dollar bonds is expected to maintain stability or continue to narrow, and the bright performance of the Asian US dollar high -yield debt is expected to continue.

Mutual Fund

Invest in Asian US dollar high -yield bonds

If ordinary investors want to seize the opportunity of Asian US dollar high -yield bond investment opportunities, they can use the Mutual Fund.Through in -depth investigation and comprehensive judgment, professional investment research teams have tapped the current high -quality bonds that are higher than the average of the current credit spreads higher than the average. The fundamentals are expected to continuously improve. Credit spreads have a high -quality bond with narrowing potential.At the same time, it can be combined with macro changes. Through industry configuration, long -term management, and risk control, we can strive to bring long -term stable investment income to investors.

There are 17 bond Hong Kong mutual recognition funds in the current market, involving 12 fund managers. Among them, HSBC Investment Management has 3 bond mutual recognition funds sold in the Mainland market.Second.

Data source: Wind, as of July 31, 2024.

HSBC Investment Management has provided investment management services for customers since 1973, and is committed to discovering global investment opportunities for customers. As of the end of March 2024, it has been as high as US $ 711 billion for global customers., Spread all over 23 countries and regions.(Data source: HSBC Investment Management, as of March 31, 2024)Jaipur Stock

Among them, the Asian fixed income team has a management scale of $ 62 billion, spreading all over different Asian countries and regions, making full use of global resources and local insights to help investors seize the multiple investment opportunities in the Asian bond market.(Data source: HSBC Investment Management, as of June 30, 2024)

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