In the aftermath of the Asian financial crisis in the late 1990s, a number of policy recommendations were made by various agencies to help reform the region’s financial system and prevent similar occurrences in the future.

They included the need to develop local currency bond markets and reduce dependency on banks for loan financing. In the first year of the Asian crisis the local currency bond market in east Asia excluding Japan was worth $491bn. It had grown to $3.88tn by the end of June 2008 – an annual growth rate of 22 per cent – and reached $5.5tn by the end of last September. Although the Asian Development Bank reported a slowdown in this growth in the third quarter last year due to the European debt crisis and slowing economic growth in Asia, fund managers in the region are now adding to their bond management teams. Anecdotal evidence suggests bond managers are in greater demand, with search companies reporting heightened recruitment activity.

The talent pool of Asian bond managers is more limited than in the equities business, where continued business growth and increasing global demand for Asian portfolio management since the Asian financial crisis has helped swell the ranks of analysts and managers. Whereas Asian equities have grown steadily as a percentage of a global equity allocation, Asian bonds still represent only 2 per cent of the Barclays Global Aggregate.