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Disillusion with Trump reflation offers a bump to emerging Asia

Bloomberg Published on Fri, Feb 10, 2017 / 7:48 AM GMT+8

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(Fab 10): As disillusion sets in among US Treasury traders about the Trump administration’s lack of progress on reflating the American economy, one major beneficiary is becoming apparent: emerging Asia.

The world’s fastest-growing region offers higher yields and domestic growth stories that are already attracting a renewed influx of capital, with yield premiums on junk-rated bonds hovering near the three and a half year-low they reached last month. Herald Van Der Linde, HSBC Holdings Plc’s head of equity strategy for the Asia-Pacific region, said shares in China, India and Indonesia could see gains of at least 10% this year should a "reality check" set in among investors with regard to US President Donald Trump’s policies.

In the US, benchmark 10-year yields have retreated to around 2.36% from the highs near 2.6% reached in December. Treasuries rallied after Laurence D. Fink, chief executive officer of BlackRock Inc., the world’s biggest fund manager, warned there’s a greater chance of the level dipping below 2% because some US fiscal stimulus policies won’t be in place until 2018.