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Asian EM markets have been more immune to political risk in Italy, Turkey and some other hot spots, but it might take some solace from lower oil prices and lower US yields in recent days, suggests Greg Gibbs, Analyst at Amplifying Global FX Capital.  

Key Quotes

“The Turkish central bank has asserted more control over monetary policy and has stabilised the TRL.”

“However, fears of a trade and broader political dispute between the US and China are threatening to undermine Asian EM in what is now a more nervous global investor environment.”

“The US Administration released a statement on Tuesday saying that it is moving ahead with actions proposed in March; including:

“investment restrictions” and “enhanced export control” in “industrially significant technology”;

WTO action related to Intellectual Property Rights;

a 25% tariff on $50bn of Chinese imports, “including those related to the “Made in China 2025″ program.” “The final list of covered imports will be announced by June 15, 2018, and tariffs will be imposed on those imports shortly thereafter.”

“The statement suggests that these plans are set to be implemented regardless of ongoing trade negotiations.   They are linked to policies in China to support its High Tech industries that are unlikely to be dismantled any time soon, if at all.”

“The agenda on trade may reflect broader tensions brewing between the super-powers as China flexes its muscles in the South China Sea and seeks broader global influence.”