Renewed expectations that tapering might come sooner than expected could unnerve investors in Asia, but some analysts argue there’s no need to fear a repeat of the ‘taper tantrum’ seen earlier this year.
Emerging markets saw a sharp selloff from late May to June as worries over the Federal Reserve winding down its flow of easy money prompted a mass exodus from risk assets. The MSCI Emerging Markets index plummeted over 16 percent as a result, even though the dreaded ‘taper’ is still yet to occur.
Positive data out of the U.S. last week, including stronger-than-expected nonfarm payrolls and annualized third-quarter gross domestic product growth of 2.8 percent, has revived the tapering debate once again.
However, Frederic Neumann, co-head of Asian economic research at HSBC, said Asian financial markets are more resilient now and there are a number of reasons to be optimistic.
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