Our quarterly Asia Insights publication looks to answer some of the most frequently asked questions on Asian economic and financial market developments, and their investment implications in a succinct and clear way with the help of charts from our Guide to the Markets - Asia. In this issue, we address the following questions.
Many investors are curious about the potential impact on Asian assets, both equities and fixed income. With the previous quantitative easing (QE) tapering taking place at the end of 2013, looking back to the 2014 market performance is a useful starting point. However, investors should also note there are some significant differences to the present situation.
The coronavirus pandemic still remains one of the key uncertainties facing Asia. While we are still generally optimistic on a recovery continuing to take place across Asia, countries across the region have had varying responses in dealing with the situation, which will continue to cause a differing pace of recovery in the months ahead.
Other than the evolving regulatory landscape, the pandemic continues to be the most important factor influencing the Chinese economy and investment backdrop in the next 12 months.
Since July, policy measures have been intensively introduced to push for the transition to high-quality and sustainable development. For global investors, opportunities for long-term investment in Chinese stocks seem to be emerging at this valuation level. However, we might need to have closer scrutiny of the policy trend and be selective in portfolio management.
An ongoing challenge from the COVID-19 pandemic has been the disruption of global supply chains, most notably a shortage in the supply of semiconductors. There is an expectation that these pressures will ease as COVID-19 is controlled and supply and demand imbalances fade. However, successive waves of COVID-19 cases delayed this process with implications for the economy and markets.