Talk of currency wars, persistently low interest rates and investors’ return to equities have all given markets plenty to digest in the past few months, and panels of experts addressed each theme on the fourth day of Credit Suisse’s Asian Investment Conference.
Credit Suisse experts also weighed in on whether the turbocharged growth of Asian economies such as the Philippines, Indonesia, Malaysia and Thailand could overheat and how energy security issues are likely to play out in China and Japan.
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“Despite the noise and the big talk about currency wars; despite the undeniable and very large effects on small economies, globally we do not see a huge or significant global imbalance… nor do we see huge imbalances in capital flows. We are close to something that is consistent with fundamentals, pretty much all through the dollar, the euro and the yen.” – Markus Rodlauer, China Mission Chief and Deputy Director in the International Monetary Fund’s Asia Pacific Department. Read more at the AIC Reporter and watch an interview with Rodlauer here.
“The evidence we’re seeing in terms of fund flows… is that this hasn’t been driven by new money coming into equities. There is a marked improvement of money moving back towards equities, but it’s not a significant shift, and we’re still seeing quite a good flow towards fixed-income funds. What we have seen in the last six to nine months has not been driven by evidence of a ‘Great Rotation.’” – Andrew Formica, Chief Executive Officer of the Henderson Group plc. Read more at the AIC Reporter.
“Real returns in most fixed-income products are negative at the moment. So if you are an asset allocator, and you have even a modest target designed just to maintain the purchasing power of the assets you manage, you almost have no choice but to increase your allocation to equities.” – Bill Maldonado, Chief Investment Officer and Asia-Pacific and Strategy Chief Investment Officer for Equities globally at HSBC Global Asset Management. Read more at the AIC Reporter.
“Given the fragility of the recovery and the durability of growth – it’s getting back on track, but it’s not there yet – it’s hard to see the policymakers just letting it go at some point and taking their foot off the pedal, and letting bond yields rise in a hurry.” – Neeraj Seth, Head of Asian Credit at BlackRock Inc. Read more at the AIC Reporter.
“If this growth continues, these economies will run into increasing signs of overheating or bubble characteristics and bust risks later on.” – Robert Prior-Wandesforde, Head of India and Southeast Asia Economics for Credit Suisse, speaking at a media briefing about the rapid growth of Thailand, Malaysia, the Philippines and Indonesia. Read more at the AIC Reporter.
“The reform agenda in Japan, just as the deckchairs are swapped in China, leads to questions over how the major economic blocks will interface and find compromise positions with regard to disputed waters and islands, where resources exploitation is a major factor.” – David Hewitt, Co-head of Global Oil and Gas Research for Credit Suisse, on how energy security issues will play out in Asia. Read more at the AIC Reporter.
“Above-trend growth is still hard to come by in a world where major developed economies are operating close to their limits in terms of fiscal sustainability, and the emerging markets have not yet completely left behind their reliance on export opportunities to the developed world.” – Dr. Neal Soss, Chief Economist, Investment Banking at Credit Suisse. Read more at the AIC Reporter.
“With regard to fundamentals, the European banking sector still needs to deleverage significantly due to increased capital requirements and to secure robust funding access on the back of increasing demands from creditors on capitalization given likely bail-in implementation…However, such deleveraging is a key credit positive, and coupled with central bank funding access, these positives more than offset the likely further asset quality deterioration.” - Pieter Fyfer, Head of European IG Corporate Credit Sector Strategy at Credit Suisse. Read more at the AIC Reporter.