Jingjing Huang: Hello everyone, and welcome to our Q4 update from the Asia Trade Floor. I’m Jingjing Huang, credit product strategist. Joining me today is our Asia portfolio manager, Stephen Chang. Thanks for being here, Stephen.
Text on screen: Jingjing Huang, Credit Product Strategist
Stephen Chang: Thanks, Jingjing. Great to be back.
Text on screen: Stephen Chang, Asia Portfolio Manager
Jingjing: Stephen, our latest Cyclical Outlook is titled Growth Holds, Risks Widen. Let’s start with the first keyword - Growth. Growth has been surprisingly resilient. What’s supporting it?
Stephen: There are a few important buffers. The AI investment cycle remains strong, consumers have absorbed some of the pressure from higher costs, and central banks have taken a relatively measured approach to policy.
Text on screen: Resilience remains, but risks are increasingly connected
That has helped global growth hold up. But the concern is that these buffers are increasingly connected. If AI investment slows sharply, energy pressures intensify, or financial conditions tighten, weakness in one area could reinforce another.
Jingjing: And what does that mean for investors?
Stephen: It reinforces the case for high-quality fixed income. Starting yields remain attractive, providing income and potential downside mitigation. And with outcomes becoming more differentiated, global diversification and active management continue to matter.
Text on screen: Attractive starting yields support high-quality fixed income
Jingjing: You mentioned AI investment. We hear a lot about the U.S. buildout and the Capex cycle, but what are you seeing in Asia?
Stephen: The scale is significant. Across Asia Pacific outside China, data centre capacity is projected to grow from around 20 gigawatts in 2025 to 53 gigawatts by 2030, with Malaysia and India among the largest growth markets.
Jingjing: How is all that investment being financed?
Stephen: So far, mainly through bank loans. But as the buildout continues and existing loans mature, we expect bonds to become a more important source of funding.
Potential data centre bond issuance across Asia Pacific excluding China could reach around US$24 billion a year from 2027 to 2030. That’s meaningful, but equivalent to only about 10% of average annual Asia Pacific investment-grade issuance.
Text on screen: ~US$24bn potential annual data centre bond issuance
Jingjing: So, is this an opportunity for credit investors?
Stephen: We’re constructive, but we need to look closely at the terms and how these new instruments are structured.
Asian data centre leases can be shorter than in the U.S., while project structures vary. So, we prefer stronger structures, operating assets and high-quality tenants, and we think investors should be compensated appropriately for those additional risks.
Jingjing: Let’s finish with China. The latest growth figures have just come out. What stands out to you?
Stephen: The headline was relatively resilient. China’s economy grew 4.5% year-on-year in the third quarter, up from 4.3% in Q2.
But beneath the headline, the economy remains quite uneven. Exports and industrial activity continue to provide support, while domestic demand and property remain much weaker.
Jingjing: What’s the implication?
Stephen: We expect China to remain in a low-rate environment to help support growth. It also argues for selectivity, with the potential for some policy pivots.
Text on screen: China: selectivity remains key
China’s strengths in exports, technology and advanced manufacturing remain important. But weaker domestic demand may necessitate some policy shifts, although we have only seen more incremental steps so far. Investors need to distinguish between sectors benefiting from those structural strengths and areas facing more persistent headwinds.
Jingjing: Thanks, Stephen. For more, please read PIMCO’s latest Cyclical Outlook, Growth Holds, Risks Widen. Thank you all for watching.
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Important information
Program recorded on 21 October 2026.
Past performance is not a guarantee or a reliable indicator of future results. The projections and forecasts in this presentation are predictive in nature. The actual results may differ materially from these projections.
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