Risk appetite for Emerging Asian markets seen to sour
AS US hints at recovery.
According to IG SG Daily, Emerging Asian equities which have been laggards against the US bourses, since the start of the month, will be under pressure this week as talks of tapering heats up on signs that the US labour market may be strengthening and the dollar rebounds.
While US investors cheer on tapering as good news for the economy, emerging Asian countries don’t have that luxury. The preview of what could happen when tapering occurs, was seen in the violent sell off in August where emerging Asian countries were punished, has barely given policy makers enough time to bolster up their economies.
Since August, the emerging Asian equity markets has recovered remarkably on the premise that the Fed is likely to keep monetary stimulus accommodative (Malaysia regained 8.4%, the Philippines 14%, Thailand 11%, India’s Nifty 20%, and Jakarta composite 16%).
The debt ceiling debate added to the distraction and increased the probability of tapering being pushed further off further away, due to the damage caused by the partial shutdown was costly and devastating to Americans.