Credit rating upgrades for Asian tech firms could generate a range of benefits for the sector, including lower borrowing costs, better valuations for debt instruments and more inflows. "There is real innovation happening in this space," Siew said. "You have this emerging group that were rated BBB that can realistically go toward A ratings."
Chinese dollar bonds and shares from tech and Internet firms have given up some gains in the past couple of months after the trade war with the US prompted selling. But even after losses in April and March, the bonds have returned about 2.7% so far this year.
Riding the AI wave, Chinese search giant Baidu inc. sold US$1.4 billion bonds in March. Food delivery tech company Meituan also saw its ratings upgraded this month, with S&P Global Ratings raising it by a notch to A- from BBB+ while Fitch hiked it to BBB+ from BBB.
Last year, e-commerce firm JD.com Inc. was upgraded to A3 from Baa1 by Moody's Ratings.
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A rally in Chinese technology firms' bonds for the past year and a half may have more room to run, Siew said, citing the development in the country's own "ecosystem" for AI and related chips. That "is definitely an emerging sector that has got long-term growth trends," he said. "If you want to take that long-term view, this space looks like a nice position to have."
