HSBC Global Viewpoint
Under the Banyan Tree - What's bugging Asian markets?
Nov 3, 2023
Exploring the causes behind the decline in investor sentiment in Asian markets, including concerns over Chinese growth and US interest rates. Impact of interest rates in the US and the growth in China on global stock markets. Potential scenarios for Chinese equities and the challenges faced by Jakarta, including sinking.
19:38
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Quick takeaways
- The rise in US interest rates has negatively impacted Asian markets, leading to a strong dollar and weakening local currencies, resulting in increased import costs for local economies.
- Concerns about Chinese growth and doubts about the sustainability of earnings have affected equity investors, leading to outflows from foreign investors. However, recent economic data suggests that the Chinese economy is performing better than expected.
Deep dives
Impact of Rising US Interest Rates on Asian Markets
The rise in US interest rates has had a negative impact on Asian markets. Higher than expected interest rates in the US have rattled markets globally, and this uncertainty has filtered into Asia. The stronger US economy and the possibility of further interest rate hikes by the Federal Reserve have caused worry among investors. This situation has resulted in a strong dollar, weakening local currencies in Asia and increasing import costs for local economies. Certain Asian central banks have already raised interest rates or delayed rate cuts to protect their exchange rates, which directly affects the Asian markets.
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