Asia's emerging economies are better placed than most other regions to weather a bout of turbo-charged US policy tightening, analysts say, but with a health warning that investors shouldn't rush in.
The US Federal Reserve raised interest rates by 75 basis points on Wednesday, the largest hike in more than a quarter century, and flagged further steep increases for the rest of the year to curb surging inflation.
In contrast, only hours earlier, China's central bank kept rates unchanged in the world's second-largest economy for a fifth straight month.
Expectations of aggressive US tightening had already caused a violent selloff in global stock, bond and even cryptocurrency markets, although Asian currencies and stocks rallied on Thursday.
Foreign investors have pulled money out of emerging Asia, excluding China, for five straight months, worried about inflation and a reluctance in the region to raise rates in the face of slowing global growth.
Now Asia is under pressure to tighten.
Galvin Chia, an emerging markets strategist at NatWest Markets, cautions against reading too much into Thursday's rally, warning the next few weeks could be volatile.
"There’s still a little bit of room for wiggle about what the Fed will do next," he said.
"I would say investors wouldn’t be jumping on with any sort of bigger, longer-term investment decisions at this point in time. It's still going to be a little bit choppy."
Asian economies have more support from current account surpluses and stable currencies than in previous periods when Fed rate hikes sucked money out of emerging markets, Kerry Craig, a global market strategist at JP Morgan Asset Management, said.
Local markets have sold off this year, although the moves have been far gentler than the violent capital outflows seen in US tightening cycles in 2016 and 2004.
"But we're still very cautious and neutral in terms of asset allocations, we're not saying, 'Run out and by these things now'," Mr Craig said.
"We're just saying that they are becoming more appealing, with thinking about where to find growth in portfolios" and investors can wait to see what happens to growth and inflation.
China remains a wild card.
Authorities in the country have eased regulatory crackdowns and Covid-19 lockdowns this month, but questions remain about how fast the economy will recover.
Economists say the People's Bank of China now has only limited room to ease, given the aggressive Fed and Beijing's wariness of debt bubbles.
Divergent Sino-US policies have wiped out China's yield advantage, triggering a record monthly tumble in the yuan in April as capital left. The Chinese currency has since stabilised.
Investors pulled $4.9 billion out of emerging markets last month, extending a third month of outflows, according to the Institute of International Finance.
Foreigners reversed in the last week of May and bought Chinese equities, even as they reduced holdings of Chinese bonds for a fourth month.
"The word with China is stability and control," Mr Craig said.
"They want to see there's a lot more control and stability being factored in, in terms of currency, bond and equity markets while they focus on the economy."
Underscoring this caution, China's cabinet said on Wednesday it will act decisively in ramping up support for the economy, but such efforts should not lead to excessive money issuance and an "overdraft of the future".
How other Asia central banks react to their domestic inflationary stresses is key.
NatWest's Mr Chia points to a selloff in Indonesian bonds this month as evidence investors want to see the dovish central bank change its stance.
An aggressive Fed will put pressure on Asia to "raise rates, partially because of increased risk of capital outflows and weaker currencies", said Rob Subbaraman, head of global macro research at Nomura.
"But also I think many of the Asian economies are now facing their own inflation pressures irrespective of the Fed."
Mr Subbaraman has changed his view on the Bank of Thailand staying on hold, now forecasting it will raise rates at the next two meetings. He also expects "aggressive" rate hikes in India in the second half.
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Why are you, you?
From this question, a new beginning.
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For you are a world, and a meeting of worlds.
Our dream is to unite that which has been
separated by history.
To return the many to the one.
A great story unites us all,
beyond colour and creed and gender.
The lightning flash of art
And the music of the heart.
We reflect all cultures, all ways.
We are a twenty first century wonder.
Universal ideals, visions of art and truth.
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Why are you, you?
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with the unique light of art.
Ben Okri,
PAKISTAN v SRI LANKA
Twenty20 International series
Thu Oct 26, 1st T20I, Abu Dhabi
Fri Oct 27, 2nd T20I, Abu Dhabi
Sun Oct 29, 3rd T20I, Lahore
Tickets are available at www.q-tickets.com
Heather, the Totality
Matthew Weiner,
Canongate
ASHES FIXTURES
1st Test: Brisbane, Nov 23-27
2nd Test: Adelaide, Dec 2-6
3rd Test: Perth, Dec 14-18
4th Test: Melbourne, Dec 26-30
5th Test: Sydney, Jan 4-8
ENGLAND TEAM
Alastair Cook, Mark Stoneman, James Vince, Joe Root (captain), Dawid Malan, Jonny Bairstow, Moeen Ali, Chris Woakes, Craig Overton, Stuart Broad, James Anderson
Our legal consultants
Name: Hassan Mohsen Elhais
Position: legal consultant with Al Rowaad Advocates and Legal Consultants.
If you go
The flights
Emirates flies from Dubai to Funchal via Lisbon, with a connecting flight with Air Portugal. Economy class returns cost from Dh3,845 return including taxes.
The trip
The WalkMe app can be downloaded from the usual sources. If you don’t fancy doing the trip yourself, then Explore offers an eight-day levada trails tour from Dh3,050, not including flights.
The hotel
There isn’t another hotel anywhere in Madeira that matches the history and luxury of the Belmond Reid's Palace in Funchal. Doubles from Dh1,400 per night including taxes.
Golden Shoe top five (as of March 1):
Harry Kane, Tottenham, Premier League, 24 goals, 48 points
Edinson Cavani, PSG, Ligue 1, 24 goals, 48 points
Ciro Immobile, Lazio, Serie A, 23 goals, 46 points
Mohamed Salah, Liverpool, Premier League, 23 goals, 46 points
Lionel Messi, Barcelona, La Liga, 22 goals, 44 points
Six things you need to know about UAE Women’s Special Olympics football team
Several girls started playing football at age four
They describe sport as their passion
The girls don’t dwell on their condition
They just say they may need to work a little harder than others
When not in training, they play football with their brothers and sisters
The girls want to inspire others to join the UAE Special Olympics teams
If you go
The flights
The closest international airport for those travelling from the UAE is Denver, Colorado. British Airways (www.ba.com) flies from the UAE via London from Dh3,700 return, including taxes. From there, transfers can be arranged to the ranch or it’s a seven-hour drive. Alternatively, take an internal flight to the counties of Cody, Casper, or Billings
The stay
Red Reflet offers a series of packages, with prices varying depending on season. All meals and activities are included, with prices starting from US$2,218 (Dh7,150) per person for a minimum stay of three nights, including taxes. For more information, visit red-reflet-ranch.net.
Our family matters legal consultant
Name: Hassan Mohsen Elhais
Position: legal consultant with Al Rowaad Advocates and Legal Consultants.
England's lowest Test innings
- 45 v Australia in Sydney, January 28, 1887
- 46 v West Indies in Port of Spain, March 25, 1994
- 51 v West Indies in Kingston, February 4, 2009
- 52 v Australia at The Oval, August 14, 1948
- 53 v Australia at Lord's, July 16, 1888
- 58 v New Zealand in Auckland, March 22, 2018
The specs: 2018 Ducati SuperSport S
Price, base / as tested: Dh74,900 / Dh85,900
Engine: 937cc
Transmission: Six-speed gearbox
Power: 110hp @ 9,000rpm
Torque: 93Nm @ 6,500rpm
Fuel economy, combined: 5.9L / 100km
MATCH INFO
Uefa Champions League semi-final, first leg
Bayern Munich v Real Madrid
When: April 25, 10.45pm kick-off (UAE)
Where: Allianz Arena, Munich
Live: BeIN Sports HD
Second leg: May 1, Santiago Bernabeu, Madrid
MATCH RESULT
Liverpool 4 Brighton and Hove Albion 0
Liverpool: Salah (26'), Lovren (40'), Solanke (53'), Robertson (85')
Anti-semitic attacks
The annual report by the Community Security Trust, which advises the Jewish community on security , warned on Thursday that anti-Semitic incidents in Britain had reached a record high.
It found there had been 2,255 anti-Semitic incidents reported in 2021, a rise of 34 per cent from the previous year.
The report detailed the convictions of a number of people for anti-Semitic crimes, including one man who was jailed for setting up a neo-Nazi group which had encouraged “the eradication of Jewish people” and another who had posted anti-Semitic homemade videos on social media.
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