The Asia Credit Exposure Index (ACEI) rose from 38 to 55 last month, according to a report on Asian credit from the financial services firm.
"Since July, this is the first time investors are overweight credit,” Morgan Stanley said.
It also noted that Asian credit underperformed over the past week. “iTraxx Asia ex-Japan widened by 5bp on the week. Asian cash IG widened by 11 bp while Asian cash HY widened by 30bp over the last week,” it said.
Morgan Stanley also observed that Australian corporates have been on a deleveraging trend for the past two quarters, and added its belief that the trend would likely fade as corporate confidence improves and upcoming changes in the tax law would spur more share buybacks.
“The end of the deleveraging trend does not mean the beginning of re-leveraging for two reasons. First, the sheer breadth of deleveraging makes it impossible to turn faster than ‘slow’. Second, the markets are not giving companies much incentive to deleverage,” it said.
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