Global investors pivot towards Asia due to currency appreciation and increased earnings
Despite ongoing global trade tensions and uncertainties surrounding tariffs, foreign investors are cautiously optimistic about Asian markets. They are being attracted by several favorable factors that are drawing in global capital.
TroibNews 
As global trade tensions and uncertainties surrounding tariffs continue, foreign investors are maintaining a cautiously optimistic outlook on Asian markets, driven by various factors that are appealing to global capital.
The shift in investments from US markets to Asian equities appears to be just starting, spurred by two major elements: Gradual currency appreciation and an "inflection point" in earnings estimates, as noted by Manishi Raychaudhuri, founder and CEO of Emmer Capital Partners Ltd., in a Reuters commentary published Wednesday.
Since February, the Chinese yuan has appreciated by 2.4 percent, with the Singapore dollar and Indian rupee gaining 3.6 percent and 2.3 percent, respectively. Generally, currency appreciation signals an influx of foreign capital, and analysts anticipate that this trend will persist, especially in under-owned Asian markets.
"With fundamentals in many Asian markets now appearing to turn around—driven by positive trends in China and improved consumption in South Asia—we could soon see an inflection point," Raychaudhuri remarked.
According to HSBC's Emerging Markets Sentiment Survey for March, 45 percent of investors saw China's economic recovery as the most significant upside factor for emerging markets, a rise from 29 percent in the previous survey.
Analysts believe that increasing confidence in China's economic outlook, coupled with recent stimulus measures, is drawing global investors who are looking for opportunities beyond developed markets.
While acknowledging concerns about ongoing trade disputes and potential US tariff increases, Deutsche Bank stated in a report on Tuesday that Chinese equities could still gain from further fiscal and monetary policy adjustments expected in response to external challenges.
In a related note, Goldman Sachs highlighted that Japan's currency "screens as a more attractive hedge for the downside view on US growth than it has done for some time," according to a report by Bloomberg.
Goldman Sachs forecasts that the yen will rise to the low 140 levels against the dollar this year, as concerns regarding US growth and trade tariffs elevate demand for safe assets.
Kamakshya Trivedi, head of global foreign exchange, emphasized in an interview in New York that if there is an increase in US recession risks, the yen is poised to become the preferred safe-haven asset for investors seeking protection against downside risks, as reported by Bloomberg.
Despite the geopolitical and macroeconomic uncertainties, analysts argue that the improving fundamentals in Asia and supportive policy measures could make the region an increasingly appealing destination for global capital in the coming months.
Mathilde Moreau for TROIB News
The shift in investments from US markets to Asian equities appears to be just starting, spurred by two major elements: Gradual currency appreciation and an "inflection point" in earnings estimates, as noted by Manishi Raychaudhuri, founder and CEO of Emmer Capital Partners Ltd., in a Reuters commentary published Wednesday.
Since February, the Chinese yuan has appreciated by 2.4 percent, with the Singapore dollar and Indian rupee gaining 3.6 percent and 2.3 percent, respectively. Generally, currency appreciation signals an influx of foreign capital, and analysts anticipate that this trend will persist, especially in under-owned Asian markets.
"With fundamentals in many Asian markets now appearing to turn around—driven by positive trends in China and improved consumption in South Asia—we could soon see an inflection point," Raychaudhuri remarked.
According to HSBC's Emerging Markets Sentiment Survey for March, 45 percent of investors saw China's economic recovery as the most significant upside factor for emerging markets, a rise from 29 percent in the previous survey.
Analysts believe that increasing confidence in China's economic outlook, coupled with recent stimulus measures, is drawing global investors who are looking for opportunities beyond developed markets.
While acknowledging concerns about ongoing trade disputes and potential US tariff increases, Deutsche Bank stated in a report on Tuesday that Chinese equities could still gain from further fiscal and monetary policy adjustments expected in response to external challenges.
In a related note, Goldman Sachs highlighted that Japan's currency "screens as a more attractive hedge for the downside view on US growth than it has done for some time," according to a report by Bloomberg.
Goldman Sachs forecasts that the yen will rise to the low 140 levels against the dollar this year, as concerns regarding US growth and trade tariffs elevate demand for safe assets.
Kamakshya Trivedi, head of global foreign exchange, emphasized in an interview in New York that if there is an increase in US recession risks, the yen is poised to become the preferred safe-haven asset for investors seeking protection against downside risks, as reported by Bloomberg.
Despite the geopolitical and macroeconomic uncertainties, analysts argue that the improving fundamentals in Asia and supportive policy measures could make the region an increasingly appealing destination for global capital in the coming months.
Mathilde Moreau for TROIB News
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