ADB hails Vietnamese bond growth

Vietnam’s domestic bond market saw the strongest growth rate in East Asia in the third quarter of this year

The figure showed an increase of 21.4 pct compared to the same period last year.

According to the report, bond profitability rates for most economies in the region were falling during the quarter amid medium inflation, good economic growth and stable demand by investors. However, China was an exception due to increasing worries about its economic growth and inflation.

The ADB said the region’s domestic bonds totalled $6.2 trillion during the quarter, up 3.5 pct from the figure of late June and up 11 pct against late September 2011. Government bonds continued to take a decisive role with a total of $4.1 trillion in circulation by the end of September, up 3.1 pct compared to the figure of late June.

The bank assessed that Vietnam’s domestic bonds grew the strongest in the region during the quarter. However, the market saw a decrease of 2.7 pct compared to the quarter earlier due to a fall in the values of government bonds and corporate bonds compared to late June.

The values of circulated government bonds decreased as a result of a 62 pct tumble in the value of treasury bills issued by the State Bank of Vietnam.

Several corporate bond markets saw faster growth compared to the government bond markets, with circulated bonds valued at $2.2 trillion by late September, up 4.2 pct compared to late June.

However, there have been differences in the total values of issued bonds in the third quarters between economies, increasing 38.1 pct in Malaysia, 13 pct in the Philippines, 10.5 pct in China, but down 81.3 pct  in Vietnam, 25.9 pct in China’s Hong Kong and 8.1 pct in Thailand.

Iwan Azis, Head of ADB's Office of Regional Economic Integration, said there had been some risks to domestic bond markets as the US may face fiscal cliff while China’s new leaders would have to face a slowdown in economic growth. Other potential dangers include varying investment flows and high inflation.

Developments in developed financial markets also had negative impacts on regional bond markets, he added.