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.
Global investors are focusing on the U.S. economic recovery and the supply side bottlenecks that push prices higher at a quicker pace. While the big debate today is whether the Federal Reserve (Fed) should push forward its monetary policy normalization to tame inflation, the same question could be applied to Asian central banks.
Credit slowdown has been a key feature in China’s debt-stabilizing effort this year, especially when the domestic economic activity has broadly normalized. China’s latest April credit growth continued to moderate as new bank loans and total social financing (TSF) both exhibited slower expansion.
In the second half of 2020, property prices soared in Chinese tier-1 cities. On a year-over-year basis, the average prices in these cities rose by about 10% in 2020, with even stronger price momentum in these cities’ premium properties. Both the worsening affordability and rising leverage point to a bubble risk. However, an immediate bubble burst seems unlikely.
As the pace of vaccinations accelerated across the U.S. and Europe, Asia’s performance has been relatively slow, creating both economic and health risks.