Asian bond investors could be the big winners from the atypical pneumonia outbreak even while equity investors suffer bruising losses.
Long ignored as a personal investment tool by regional investors, the impact of weak economic growth and deflation stemming from the Sars outbreak meant investors were advised to switch from stock investments to steady bond holdings, HSBC Asset Management director and head of fixed income Cecilia Chan said.
She was speaking at the launch of a fund product and, as with other bond fund managers, hoped the outbreak would lead to a change in the investing mind-set.
'When global stock markets are performing poorly, bond funds become a safe haven for investors,' Ms Chan said.
Asian bonds were mostly issued by governments and public bodies, making them less prone to profit risks posed by Sars-induced economic weakness, she said.
'In contrast to American or European companies hurt by the spill-over from corporate scandals, the Asian issuer universe has simpler balance sheets and generally enjoys better government support,' she said.
However, sounding a warning note on the deflation-busting bond sector, a recent report by ratings agency Fitch said banks, in particular, could not expect revenue from fixed-income activities to continue padding their profits.