Broadening the Investor Base for Local Currency Bonds in ASEAN+2 Countries
This study was undertaken under ABMI and funded by the Government of Japan. It focuses on measures to expand the investor base for local currency bonds in ASEAN and the PRC and the Republic of Korea, with the goal of generating greater variety in investment objectives and a wider range of investment strategies. This will enhance market liquidity by creating new trading opportunities and will reduce market fluctuations by allowing bonds exhibiting different investment risks to be held by those most capable of bearing them. It is not only the size of the investor base that matters but also its diversity. An investor base can be large, however, if it is concentrated among a small number of institutions employing similar investment strategies, the result may be a multitude of “buy-and-hold” portfolios that ultimately undermine the efficiency and effectiveness of local bond markets.