Rising US yields pose threat against Asean markets

Are Asean stocks losing their lustre?

According to BNP Paribas, one of the main reasons for increased investor interest in Asean markets was the availability of relatively-safe high-yielding stocks, particularly telecoms and financials.

The dividend yields offered by these stocks (5-7%) were viewed as attractive in an environment where US bonds offered very low yields (1.5-2%).

With rising US yields, these stocks become less attractive. Many investors are still positioned in Malaysian banks, Singapore REITs and Asean telcos purely because of dividend yield considerations.

"We would caution against such exposure because dividend yield plays are becoming increasingly unattractive," says BNP Paribas.

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