The major Asia economies are on a “different path” to that of Europe and so can be a diversifier for investors this winter, according to Taosha Wang, multi-asset investor at Fidelity International.
Wang says that the major Asian economies are less challenged by high energy prices than are European economies and, therefore, can pursue policies to stimulate economic growth with greater freedom than can governments in other parts of the world.
Additionally, central banks in many parts of the developing world have greater scope to increase rates if they so wish, as rates there are higher to begin with.
Wang said: “In a number of ways, Asia will be on a different path this winter. The region’s key economies serve as a useful diversifier that is insulated to a degree from the struggles facing Europe, with less inflationary headwinds. This implies more headroom for growth-oriented policies in the region, which differs from many other parts of the world where high inflation is forcing central banks to tighten financial conditions.
"Additionally, the 20th Party Congress in China could herald more policy certainty heading into 2023 and increased assertiveness in government stimulus. China has already eased various property policies in response to a soft housing market. That said, overhangs from zero-Covid policy in China, FX volatility due to dollar strength, and uncertainties related to the Bank of Japan’s (BoJ) yield curve control regime still warrant some caution. But overall, we are turning more positive on Asia.”
Her favoured developed equity market is the US, where she feels the economy is more resilient due the lack of damage from the energy price shock.