(Reuters) – Indian bonds faced sharp foreign outflows in May on worries about rising domestic coronavirus infections, while other Asian fixed income markets attracted inflows on hopes for a swift economic recovery as countries eased lockdowns.

Last month, foreigners sold a net $3.04 billion worth of Indian bonds while they bought a combined net total of $3.12 billion worth of South Korean, Malaysian and Indonesian bonds, data from regional banks and bond market associations showed.

Foreign flows into Asian bonds here

The number of coronavirus cases in India surged in May and last week the country became the world’s fourth worst-hit nation. As of Monday, India had more than 332,000 confirmed cases and about 9,500 deaths.

Earlier this month, Moody’s Investors Service downgraded the country’s credit rating to a notch above junk, citing a prolonged period of slow growth in Asia’s third-largest economy.

“India’s sovereign rating downgrade by Moody’s and the poor growth outlook could further weigh on portfolio flows,” said Khoon Goh, head of Asia research at ANZ.

Overseas investors sold $271.6 million worth of Indian bonds in the first 10 trading days of this month, the data showed.

Thai bonds also faced outflows worth $164 million last month, however, South Korea, Indonesia and Malaysia received $ 2.29 billion, $485 million and $343 million, respectively, in inflows.

While Asian markets fell sharply on Monday on fears about a second wave of coronavirus infections, some analysts said most countries in the region were equipped to handle another outbreak.

China, Korea, Taiwan, Hong Kong, Thailand, and Malaysia have been able to keep any resurgence in daily cases to a manageable range, Morgan Stanley said in a note.

“The risks are in India, Indonesia, and the Philippines,” the brokerage said.