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Doug Krizner: We talk a lot about the credit crunch as if we’ve never had one before. I remember the 1990’s, when the Asian financial crisis forced banks to stop lending. Now to fill that gap, that need for credit, bond markets developed in Asia, and they’ve been growing ever since. In the current credit crunch, banks have again closed their purse strings. And as Ashley Milne-Tyte reports, Asian bond markets are soaring to new heights.
Ashley Milne-Tyte: With the bond markets lagging in Europe and the U.S., institutional investors are pumping money into Asia.
Glenn Yago is director of capital studies at the Milken Institute:
Glenn Yago: With the collapse in pricing in subprime and certain areas of the bond market, there is an interest in trying to find yield in what are these dynamic, very vastly growing economies.
Where institutions go, individual investors follow.
Todd Lee heads the greater China group for Global Insight. He says in China, the public cashed out of their bank savings accounts and into the stock market. Now, they’re taking the next step.
Todd Lee: The stock market recently, you know, has been pretty volatile, so I think there’s a lot of demand too for corporate bonds.
Asian companies are matching that demand with a torrent of supply. The Milken Institute’s Yago says the big issuers are real estate, telecoms, energy and commodities businesses.
I’m Ashley Milne-Tyte for Marketplace.
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