Asia-Pacific | FX

Is USD Strength Weighing Down EM Asia Stocks?

_{Posted on Oct 1, 2018}

Since mid-April, the USD gained nearly 20% against emerging market (EM) Asia currencies and 10% against G10 currencies. USD strength has largely been a function of capital inflows into the US attracted by strengthening US stock prices and higher interest rates.

The USD was a safe haven as global uncertainties rose with trade tensions and concerns over Brexit.

USD strength has been historically associated with relative underperformance from EM equities, which slid 20% from April highs. Citi analysts forecast that US-China trade tensions now represent the main impediment for EM equities growth, with Fed tightening and a stronger USD largely secondary factors.

Within EM Asia, China remains the worst-performing equity market impacted by trade talks, which escalated in mid-June. Concerns over the threat of US trade tariffs and sanctions also drove down equity markets in Korea, Singapore and Hong Kong. India, Malaysia, Thailand and Taiwan have been more resilient.

Citi analysts forecast that the recent USD strength is likely to be temporary and that fiscal stimulus, tax reform, larger deficits and a weakened net international investment position may be bearish factors for the USD in the long term.

Citi maintains its overweight call on EM Asia equities given attractive valuations and improving economic growth. Within the region, China’s recent credit easing measures and government support for increasing infrastructure spending is likely to be positive for Chinese equities going forward.

_{By Citi Global Wealth Investments | Mar 18, 2024}

Weekly FX Focus - DXY: Attention On The BoJ, Fed And SNB This Week

Markets see a busy week with 10 central bank meetings this week. Our Head of FX Strategy brings our focus to 3 central bank meetings that markets highly anticipate.

_{By Citi Global Wealth Investments | Mar 14, 2024}

Weekly FX Focus - JPY: Spotlight Shifts to Yen Ahead of BoJ Meeting

After decades of poor economic performance, Japan now sees wage growth, inflation, and avoided a technical recession. Are we finally seeing the light at the end of the tunnel for Japan? This week, our Global Head of FX Strategy analyzes the situation for the Yen and compare the differences in central bank policy between Japan and the US.

FX Economy Asia-Pacific

_{By Citi Global Wealth Investments | Mar 7, 2024}

Weekly FX Focus - NZDCHF: NZ Rates Higher For Longer, SNB Poised to Cut

The Reserve Bank of New Zealand made an unexpected decision to keep rates unchanged last week. Meanwhile, the Swiss National Bank is expected to cut rates. This week, we examine the circumstances of both economies and discover how NZD could benefit.

FX Economy Asia-Pacific

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