Jingjing: Hello everyone and welcome to the first quarterly Asia Trade Floor update in 2026. I’m Jingjing Huang, credit strategist. Today with me, we have our Asia credit portfolio manager, Stephen Chang. Thank you for joining us, Stephen.
Stephen: Hi Jingjing. Great to be here.
Jingjing: So, Stephen, in our new Cyclical Outlook, Compounding Opportunity, we talk about resilient growth but also widening divergence. What are the key takeaways for investors?
Stephen: Global growth has held up better than expected, helped by AI‑related investment and productivity gains.
But that resilience is uneven.
Text on screen: Global growth is holding up, but outcomes are uneven
We’re seeing more of a K‑shaped dynamic. Companies and sectors benefiting from AI‑driven investment are pulling ahead while others lag.
At the same time, policy paths are diverging. Some central banks still have room to cut, while others are already close to neutral.
For investors, this creates durable opportunities in high‑quality fixed income. Starting yields are still attractive, and global divergence gives active managers room to add value.
Jingjing: Those global dynamics really matter for Asia, especially in China. How are things shaping up there?
Stephen: China is trying to keep growth in the 4 to 5 per cent range, but it needs ongoing policy support.
Text on screen: China aims for 4–5% growth, but demand remains soft
Stronger domestic demand growth is an objective, but it’s trending softer.
Retail sales are losing momentum as earlier stimulus effects fade, and real estate is still a big drag on confidence and investment.
That’s why fiscal and monetary policy are staying accommodative, with more support for consumption, social welfare and strategic infrastructure.
From an investment perspective, Chinese government bonds still look attractive given subdued inflation and continued easing. The currency picture is also improving, with the People’s Bank of China focused on keeping things stable.
Jingjing: And China’s export engine is still going strong.
Stephen: Yes, China’s manufacturing scale and cost advantages remain intact. The new Five‑Year Plan, which begins this year, puts major emphasis on productivity and technology. That’s helping China expand its export share and move up the value chain. But even with that strength, the spillovers to the rest of Asia aren’t what they used to be.
Jingjing: What’s changed?
Stephen: A few things. Chinese export prices are soft, which keeps inflation low across Asia. But it’s also pressured regional trade balances and corporate margins in many economies.
Text on screen: Tech‑linked economies are benefitting the most
Export momentum in the rest of Asia will likely weaken from last year’s high base, especially for economies not tied into the semiconductor cycle. Meanwhile, the more open, tech‑linked economies, such as Korea, Taiwan, Singapore, continue to benefit from the AI‑driven electronics upswing. Outcomes across the region are becoming increasingly uneven.
Jingjing: Let’s turn to Japan and Australia. How are you sizing up the opportunities there?
Stephen: Japan continues its gradual policy normalisation, but what’s changed meaningfully is valuations.
Text on screen: We see better value in Japanese bonds around 30 years
Long‑end yields are now pricing in high forward rates with fiscal concerns and reduction of buyers after decades of low rates. That’s why we prefer the 30‑year area of the curve, where yields already reflect a lot of those risks.
Australia tells a different story. Growth is steady, but households are still facing restrictive conditions and inflation recently moved back above the RBA’s target band.
Text on screen: Australian bonds offer income and diversification
While further tightening can’t be ruled out, we think the RBA is more likely to hold rates near current levels. That makes longer‑dated Australian bonds attractive, particularly given the yield premium over U.S. Treasuries.
Jingjing: Thank you, Stephen. That’s all the time we have today. For more details, please read our latest APAC Market Outlook.
Stephen, thanks again for your insights, and thank you all for watching.
Stephen: Thanks, Jingjing, and thanks everyone for joining us.
Disclosures
Important information
Program recorded on 27 January 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.
This video is issued in Hong Kong by PIMCO Asia Limited and has not been reviewed by the Securities and Futures Commission. This video is issued in Singapore by PIMCO Asia Pte Ltd and has not been reviewed by the Monetary Authority of Singapore.
All investments contain risk and may lose value. Investing in the bond market is subject to risks, including market, interest rate, issuer, credit, inflation risk, and liquidity risk. The value of most bonds and bond strategies are impacted by changes in interest rates. Bonds and bond strategies with longer durations tend to be more sensitive and volatile than those with shorter durations; bond prices generally fall as interest rates rise, and low interest rate environments increase this risk. Reductions in bond counterparty capacity may contribute to decreased market liquidity and increased price volatility. Bond investments may be worth more or less than the original cost when redeemed. Investing in foreign-denominated and/or -domiciled securities may involve heightened risk due to currency fluctuations, and economic and political risks, which may be enhanced in emerging markets. Currency rates may fluctuate significantly over short periods of time and may reduce the returns of a portfolio. Equities may decline in value due to both real and perceived general market, economic and industry conditions. Management risk is the risk that the investment techniques and risk analyses applied by an investment manager will not produce the desired results, and that certain policies or developments may affect the investment techniques available to the manager in connection with managing the strategy. The credit quality of a particular security or group of securities does not ensure the stability or safety of an overall portfolio. Diversification does not ensure against loss.
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CMR2026-0128-5165582
