Asian markets led by China to benefit from global capital inflows in 2020, as US dollar weakens, analysts say
- Asian currencies such as Korean won, Taiwanese dollar and Malaysian ringgit to strengthen the most against the US dollar, Deutsche Bank says
- Asia will be more attractive among emerging markets in terms of valuations, Manulife Investment Management says
Emerging markets in Asia, including China, could benefit from an influx of global capital in 2020, with the region offering upbeat economic growth prospects amid the possibility the US dollar could weaken after a decade-long extended rally, strategists said.
The dollar’s strengthening cycle against emerging market currencies will peak next year, as the rest of the world catches up with the United States’ bright economic growth this year, Deutsche Bank said.
“That will help bring more money into local markets, local currency funds in emerging markets and Asia, which I think will be very critical next year,” Sameer Goel, head of Asia macro strategy at the German bank, said in an interview.
“The focus will move away from the outperformance of the US cycle versus the rest of the world – both the business cycle and policy cycle – towards one where there is a greater amount of convergence, which allows the rest of the world to start to outperform the dollar.”
Asian currencies such as the Korean won, Taiwanese dollar and Malaysian ringgit are likely to strengthen the most against the US dollar, Goel said.
US equities led the global markets this year. The MSCI USA Index has climbed 28 per cent so far this year, against a 24 per cent rise in the MSCI World Index and 19 per cent gains by the MSCI China Index.