UBS Says High Yields Are Creating Investment Opportunities: EM Asia Is Standing Out.

UBS is turning to emerging Asian bonds and commodities as elevated global yields, geopolitical uncertainty, and continued investment in artificial intelligence reshape opportunities across financial markets.

Adrian Zuercher, co-head of global asset allocation and co-head of global investment management for Asia-Pacific at UBS's Chief Investment Office, said the bank has been shifting more clearly toward emerging-market Asian debt, where it sees attractive value in both credit and fixed income.

"We actually started to shift clearly into EM Asia because we see value," in both credit and fixed income amid high yields, Zuercher told CNBC's "Squawk Box Asia." The call comes as bond markets remain under pressure from a combination of higher interest rates, inflation concerns, government borrowing and geopolitical risks.

UBS noted that global bond yields have moved sharply higher over the past weeks, with the 10-year U.S. Treasury yield recently topping 5%. The bank has nevertheless maintained that fixed income can offer attractive income opportunities, provided investors remain selective about duration and credit risk.

Within emerging markets, Zuercher sees Asia as particularly attractive. A strong macroeconomic backdrop could support emerging-market debt, he said, with Asian bonds tied to the technology sector, particularly high-yield securities, offering opportunities after outperforming in recent months.

Zuercher also argued that today's high-yield market is of "much better quality" than it was 10 or 15 years ago, potentially changing the risk-reward equation for investors willing to venture beyond investment-grade debt.

UBS Asset Management has separately highlighted the resilience of Asia high-yield and Chinese credit. In its latest emerging-markets outlook, the firm said, "We continue to see Asia as a differentiated opportunity set within [emerging-markets], supported by AI-related investment, selected earnings improvement and the diversification role of regional fixed income."

The bank's search for opportunities is not limited to bonds. Zuercher said gold remains a "very good" portfolio diversification asset, particularly given what he described as structural weakness in the U.S. dollar.

"It's definitely a good trading environment for gold," he said. UBS has continued to make the strategic case for the precious metal despite the pressure that higher interest rates can place on non-yielding assets.

The bank said earlier this month that gold remains valuable as a long-term portfolio diversifier, citing central-bank purchases, concerns about government debt and fiscal sustainability, inflation risks and geopolitical uncertainty.

But investors looking for protection beyond gold may want to broaden their commodity exposure, according to Zuercher. "If you really want to diversify with commodities, then probably having a broad commodity exposure looks more interesting, given also the Middle East situation where oil is drifting higher," he said.