Encouraged by China’s steady economic growth, signs of improving U.S. labor markets and easy monetary policies by the world’s major central banks, global investors have been changing their erstwhile defensive posture in Asia-Pacific. Since the beginning of the year, the regional stock index has nearly caught up with American and euro area equity markets.
Barring major security upheavals in East Asia, it is possible that its relatively attractive equity market valuations will continue to bring capital from apparently expensive and fully valued markets in the U.S. and in the euro area.
The extent to which that might happen depends on East Asian economic activity, the pace of monetary “normalization” in the U.S. and in the euro area, and – most importantly – on peace and unimpeded commerce in that fast-growing segment of the world economy.
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