Implications of Global Rate Cut Cycle on Asia

The global rate cutting cycle has begun, with Asia expected to follow suit. Asian central banks are likely to cut rates in line with the Fed, with one rate cut in the fourth quarter and potentially two to three more cuts in 2025. GDP growth in Asia is expected to reach between 5 to 5.5%, supported by the global KPAC cycle and improved manufacturing. Asian FX is forecasted to regain some ground against the US dollar, with a modest recovery anticipated in the second half of the year. Investment grade credit is expected to outperform high yield in the early easing phase, with a preference for Asian banks tier two credits, Indonesian US dollar sovereigns, and Indian local currency bonds. Kong property stocks and Singapore REITs are likely to experience the greatest relief in equities, while emerging Asian banks in India, the Philippines, and Indonesia are expected to perform well during a flat or falling U.S. 10-year yield.