Some investors are flocking to Asian fixed income assets, lured by the prospect of juicy returns even as large chunks of the global bond market are seeing yields lurch deeper into negative territory.
Income-seeking bond investors have had a tough few years.
A record plunge in developed market bond yields, which move inversely to prices, has caught large sections of the market by surprise. Japanese bonds maturing in 40 years yield less than 0.10 percent, while investors are paying for the privilege of lending short-term money to Spain and Italy, countries where fiscal profligacy had sparked a crisis only a few years ago.
The U.K.'s vote last week to exit the European Union (EU) made it even tougher, with a rush of funds seeking safer havens pouring into government bonds, pushing some to record low yields.
Following the turmoil of the Brexit vote, the amount of bonds with negative yields has jumped to $11.7 trillion. That's a 12.5 percent increase since the end of May, according to a Fitch Ratings report Wednesday.
The portion of the bond market in negative-yielding territory was likely only to deepen, particularly in Europe and Japan, and that's set to drive funds into Asia's bond markets, analysts said.
"The quantitative easing coming out of Japan and coming out of Europe continues to drive flows into other high-yielding assets," Stephen Chang, head of Asia fixed income at JPMorgan Asset Management, told CNBC's "Street Signs" on Wednesday.
"We are looking at emerging market countries and Asian countries for their yield quite a bit more. That would be the next destination for people to chase yield," he said.
Chang said that while he liked dollar-denominated bonds by Asian borrowers, he preferred Asia local-currency issues, noting some of the region's central banks still had capacity to cut rates and currencies appeared cheap after the dollar rallied last year. That suggested the local-currency bonds could rise.