Regional spillover from the Bank of Japan's massive money printing effort has arrived just in time for the rest of Asia, where markets are bracing for volatility and a reversal of dollar inflows when the US Federal Reserve raises interest rates. Two full years into the Bank of Japan's latest quantitative easing initiative has lifted Japanese bank lending to emerging Asia to a record high, at close to US$500 billion. HSBC economists say that the trend of capital flow is clear: Japanese firms are shifting productive assets to Southeast Asia at the expense of other markets. "The bottom line: bank lending matters the most and is still climbing, portfolio investment had a strong 2014 and FDI has shifted to Asean."
