Asia 2017 outlook: Sailing into the storm - Nomura

Research Team at Nomura suggests that trying to stay on an even keel will be more challenging than in 2016 as Asia’s structurally slowing economies, many in a late-stage credit cycle, are vulnerable to more inward-looking US policies and geopolitical risks.

Key Quotes

“We see a major decoupling of Asian monetary policy from the Fed.” 

“FX strategy: We expect short CNH and SGD (against USD) to provide the highest total return into Q2 2017. We remain long USD/HKD and have a basket of long INR, PHP and THB versus CNH, KRW and TWD. From around Q2 2017, South/Southeast Asia may outperform Northeast Asia.”

“Rates strategy: We prefer steepeners in KRW, THB, TWD and INR. We also like long bonds in India, HKD payers and AUD front-end receivers.”

“Equity strategy: We are cautious and expect the MSCI Asia ex-Japan to end 2017 slightly below current levels; our top Overweight is India.”