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The next must-have investment presents $50 trillion in opportunities, says investor

Key Points
  • The $50 trillion of debt across Asia today presents the same value of opportunities to investors, said Robert Petty of Clearwater Capital Partners
  • Asia's large economies and stable currencies make for a worthwhile investment in credit, Petty said
  • His comments come at a time when regulators in China, which accounts for 60 percent of Asia's credit market, are clamping down on lending
Asia credit is now a "must have' in fund manager portfolios

Yield-seekers are now turning their eye to a new must-have investment, one that presents tens of trillions of dollars in opportunities, according to Robert Petty, managing partner and co-founder at Clearwater Capital Partners.

Speaking with CNBC, Petty said the $50 trillion worth of debt across Asia presents the same value of opportunities to investors. Strong economic fundamentals in the region, he added, mean that time is ripe for investment.

"As you look at the stability of the currencies and the scale of these economies, we've now really gone from a conversation of nice-to-have, maybe a niche strategy, to ... a must-have for institutional investors," Petty, whose private equity firm has offices throughout Asia and in the U.S., said.

"You have a 4 percent benchmark interest rate there, relative to say 2 percent in the euro," he added.

Petty's comments come at a time when financial regulators in China, a country accounting for 60 percent of Asia's credit market, are clamping down on lending.

Regulators are pressuring banks to rein in riskier corporate loans, including short-term credit on which many smaller companies rely, Reuters reported in June.

But Petty said he was not deterred by increased banking regulation in Bejiing. In fact, he said, it creates a more efficient and liquid lending environment that will benefit both consumers and investors.

The new restrictions help to "build a more logical credit curve ... and to bring in non-bank lenders," Petty said.

And with Beijing's policies to encourage the growth of non-traditional lenders and payments systems, such as Alipay, consumers can be reached more effectively, he added.

China's banking regulator is expected to tighten control over risks in the financial markets in the near term, including those related to liquidity, credit and shadow banking. Those measures could include cracking down on companies taking on excessive debt.