Nikko Asset Management Ltd. and GAM Holding AG are trimming holdings of Chinese dollar-denominated junk bonds amid their strongest rally in almost a year, concerned over a surge in issuance and a possible asset bubble.
Investors should buy bullish options on Taiwan’s benchmark stock index because it will extend gains as Chinese trade and tourism increase and rising technology sales boost corporate profits, Morgan Stanley said.
Investors should sell speculative- grade debt of government-backed Asian companies and buy property or commodity bonds as economic growth in the region justifies more risk-taking, according to Morgan Stanley.
Foreign currency bonds issued by Chinese property companies may receive a “terrific boost” after China signaled the end of a two-year currency peg to the dollar, reducing the chance of higher borrowing costs, Morgan Stanley said.
Investors should buy bullish options on Singapore stocks because the derivatives are inexpensive and the shares may rally on higher earnings growth and a strengthening Singapore dollar, Morgan Stanley said.