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Our philosophy is very simple. We are constantly searching for high quality businesses and when we acquire them, we will work relentlessly with them to create long-term sustainable value through innovation, ESG-led and proactive asset management.
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formerly Realindex Investments
Leader in active quantitative equities across Australian equities, global equities, emerging markets and global small companies.
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Stewart Investors manage investment portfolios on behalf of our clients over the long term and have held shares in some companies for over 20 years. They launched their first investment strategy in 1988.
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A monthly review and outlook of the Asian Quality Bond market.
Market review - as at December 2024
In line with market expectations, the Fed cut rates by 25 basis points (bps) in its last meeting of the year. However, policy messaging suggested that the decision was a closer call than expected. With markets already bracing for Trump’s policies in 2025, the US Treasury curve saw the belly to longer end rates sell-off into the end of the year as markets digested the Fed’s message that came with a hawkish tilt. The US Treasury curve steepened over the month, with the 2-year-10-year yield spread reaching a 2024 high of 33bps, before retracing slightly to 32bps. 10-year US benchmark interest rates climbed 40bps over the month to end the year at 4.57% while the 2-year US interest rate increased by 9bps to end at 4.24%.
Asian credit spreads stayed well supported amid low risk sentiment and weaker year end liquidity, Asian investment grade credit spreads narrowed another 3bps to end the year at 103bps, but total returns were impacted by the sell-off in rates. J.P. Morgan Asia Credit Index (JACI) investment grade bonds recorded -0.84% in total returns.
In India, the Adani group continued to refute bribery charges by the US Department of Justice and the SEC, projecting a ‘business as usual’ image. Bloomberg reported that Adani Green was in talks with investors and banks to refinance USD1.1bn worth of loans due in March 2025. Bonds price across the Adani complex gradually stabilised and recovered some ground from its lows. Several pockets of Asian credits did not experience the typical year end lull. Spreads of Korean credits and Korean quasi-sovereign names traded wider by low-teens on South Korea’s political turmoil as the nation’s opposition-controlled parliament nation impeached its president as well as acting president in quick succession, leaving its deputy prime minister and finance minister, Choi Sang-mok, as South Korea’s new interim leader. In Thailand, Thai Oil (TOPTB) was placed on credit watch negative by S&P on delay and cost overruns of its Clean Fuel Project; TOPTB bonds spreads widened by over 30bps. In Japan, Honda and Nissan initiated discussions for a possible merger by 2026 to enhance their competitiveness in the rapidly evolving automotive industry, particularly in the electric vehicle (EV) sector. As the bigger beneficiary of the merger, bonds of Nissan gapped 70-90bps tighter on headlines.
Asian investment grade sovereign and quasi-sovereign dollar bonds performed broadly in line with the market, with spreads partially counteracting the rise in interest rates.
The primary market was quiet in December in anticipation for a very busy start for 2025, primary markets were expected to be filled with issuers planning to secure funding ahead of market volatility that could come with Trump’s inauguration as president.
Source : Company data, First Sentier Investors, as of end of December 2024
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