"The Asian Development Bank points out that local currency bond markets are growing at a fast pace across Asia. By the end of 2012 East Asia's local currency bond market had reached $6.5 trillion in value, with corporate bond issuance up 4.2% in the third quarter of the year and up a further 6.2% in the fourth quarter. East Asia includes China, Hong Kong, Indonesia, South Korea, Malaysia, the Philippines, Singapore, Thailand, and Vietnam. The bonds are being bought by both domestic investors and foreign investors, with foreign holdings in Indonesia, for example reaching 33% of government bonds outstanding. Growth is being driven partially by domestic investors but also by foreign investors hunting greater yields than those provided by sovereign debt in Europe, the UK, and the US. However, investors need to keep an eye on the mid-term prospects for various countries in the region when taking a position and insofar as they are investing in corporate bonds, they need to understand why some Asian companies have trouble turning growth into profit. On the sovereign debt side, both China and India clearly still have issues to work through."
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