The view on Asia against a challenging geopolitical backdrop

There has been significant momentum behind Asian markets in recent months. The MSCI AC Asia ex Japan rose 13.4% in US dollar terms during the quarter, the best start to the year since 1992.

Foreign inflows, particularly into emerging Asia, have been strong and earnings revisions turned positive at the start of the year and continue to move higher.  How long will this last? In truth, much will depend on the economic and political landscape in the US in 2017. Asian markets have traded well and the region's currencies have stabilised (in some cases strengthening) year-to-date, as investors become more convinced President Trump may struggle to implement his planned reforms and rate rises in the US will be gradual. The global 'reflation trade' has also lost some of its mom...