While the upcoming US presidential election is often overhyped, market volatility is likely to increase depending on the outcome. For investors looking for market movement, this presents an opportunity, while industrial companies face growing challenges. The last 15 years, characterized by central bank and government intervention, have created a deceptive calm that could soon end.
The USD as the key to Asia
The USD, which has been supported by unprecedented fiscal deficits, has drawn international capital flows out of Asia and into the US in recent years. This has led to a weak performance of Asian markets and currencies. However, Asia has strong economic fundamentals: a young, well-educated population, technological progress and economic potential.
A significant turning point was observed in the summer of 2024, when Asian currencies posted double-digit gains against the USD for the first time. This market upheaval shows a fundamental change in investor strategies.
China’s economic future
China will play a central role in Asia’s economic recovery. After COVID and the slump in real estate prices, the government must regain the confidence of the population. An economic stimulus package for the domestic economy, particularly the real estate sector, could accelerate the recovery, especially by easing restrictions on migrant workers. The signs are pointing to movement: Asia’s economic strength and changing capital flows suggest that the region will return to growth in the long term. It could be worthwhile for investors to keep an eye on Asia and its markets, while the USD could continue to lose ground.
