With Western economies forced to tackle hugh deficits, Asia's sovereign debt and macroeconomic fundamentals look good.
The picture is in sharp contrast to 1997, when many regional governments ran larger fiscal and current account deficits than developed nations. According to last month's IMF World Economic Outlook, general government gross debt for G7 economies stood at 109.6 per cent of GDP, compared with 36 per cent for developing and industrialised Asia.
HSBC's Andre de Silva believes Asian states moderately applied crisis stimuli and moderated the strain. The West overdid stimulus and 'are paying the price', he says, adding Ireland and Greece are in 'a debt and deflation trap'.
Investors responded with yearlong inflows into emerging market debt - denominated in greenbacks and local currencies. 'It belies the increased confidence investors have in Asia's fiscal fundamentals,' says Asia strategist Manpreet Gill, at Barclays Wealth.
Lombard Odier's St?phane Monier agrees, lauding the solidity of regional sovereign debt was aided by export-focused policies 'aimed at reducing currency volatility' and preventing 'strong appreciation in their currencies', coupled with strong foreign currency reserves.
With lower debt levels, better fiscal discipline and a stronger growth outlook, 'Asian economies are well placed to support their sovereign debt issuance' - reflected in demand for local Asian bonds, he says.
