Reuters: Financial Services and Real Estate: ASIA CREDIT CLOSE: Region ends slightly wider amid two-way flow

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ASIA CREDIT CLOSE: Region ends slightly wider amid two-way flow May 2nd 2012, 09:15 Wed May 2, 2012 5:15am EDT SINGAPORE, May 2 (IFR) - Traders in Asia reported two-way flow today as profit-taking investors wrestled with bulls betting that the recent bout of risk appetite has legs. The result was that indices ended slightly wider, but bond cash prices were well-supported as real money continues to buy. Bonds were being lifted throughout the day, but there was plenty on offer especially when bids rose. "The street seemed to be willing to take the offer side of the trade," noted an analyst in Hong Kong. She also said fast money accounts were better-sellers but there still was plenty of buying interest to hold the market together. Investors were acting on the better-than-expected manufacturing numbers in the US and in China overnight. With the US showing signs of growth again, investors felt reassured that one of the pillars that supported the rally of the first quarter was still standing. However, the selling pressure from fast money was testimony that there still is plenty to worry about and that investors are not completely comfortable with the way things are right now. "Fundamentals are hugely negative, but there is so much liquidity that has been pumped into the market that it is hard" to determine what to do, said an asset manager in Singapore. Amid the tug-of-war, the Asia iTraxx ex-Japan series 17 index ended a couple of basis-points wider at 165bp. The drift wider happened mostly in the afternoon after European countries began to announce their own manufacturing numbers, which all came below expectations. The figures were a harsh reminder that while growth continues to chug along in China and the US, Europe could drag the market down. And with elections in France coming up, the situation could worsen. If the index widened alongside other indices, as the European Crossover, which closed the Asian session around 640bp, it still remained at the tight end of the 160bp-170bp range in which it has been stuck. Traders said cash prices, though, ended mostly unchanged. Even the perpetual bonds of Hutchison Whampoa did not widen any further. They had dropped 35ct to 101.50-102.00 following the announcement that the company was issuing a new perpetual bond. (Christopher.Langner@thomsonreuters.com) Link this Share this Digg this Email Reprints

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