10 Apr '11, 9pm

Government bonds lose appeal as inflation rises

SINGAPORE - Government bonds will lose their safe-haven appeal amid beliefs that the monetary authorities will tighten policy further as inflation continued to head north, market analysts said. Investors will instead be drawn to rising stocks, a trend that is clearly a reversal from that witnessed in the past 10 years when bonds outperformed equities, according to Fundsupermart. "In the Singapore context, a lot of investors do like equities. They have strong returns especially in Asian equity market space. But until more recently, following 2008 to 2009, we've seen a lot more interest in fixed income," said Mr Terence Lin, senior research analyst at Fundsupermart. "(But) we see interest rates now having sort of bottomed out. We expect them to rise to combat inflation and that will have a most suppressed outlook for bonds on the whole. And that could actually hurt bond retu...

Full article: http://www.todayonline.com/Business/EDC110411-0000296/Gov...

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