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Hong Kong. There is a large structural shift in capital flows to Asian bond markets from Europe and the United States as investors warm up to the region’s strong growth prospects, State Street Global Advisors said.

Fiscal problems in the euro zone economy and smaller public debt-to-GDP ratios in Asia compared with Western counterparts made them more attractive, said Bill Street, SSGA’s managing director. “In Asia, I think government bonds offer good value on the caveat that some look a bit rich,” he said.

SSGA is the investment management arm of State Street, the world’s second-biggest money manager with $1.9 trillion in assets under management.

“The reason is they are underpinned by strong fundamentals while there is a lot of concern and lots of risk premium in the European bond markets,” Street said.

The Boston-based company estimated government debt as a percentage of GDP in 2010 at 4.4 percent for Asia, compared with 12.2 for the UK, 11.4 percent for the US and 6.6 percent for euro zone.

On Greece, he said the debt crisis would likely be resolved in a few weeks, which would lead to a sharp tightening in spreads and called its threat to go the IMF “brinkmanship.”

Athens raised the stakes on Thursday in its quest for EU help with its debt crisis, saying it could not achieve promised deficit cuts if its borrowing costs remained high and that it may have to call in the IMF.



Reuters