Emerging Asia’s recovery can withstand reflation trade: S&P Global Ratings

The reflation trade that is lifting US yields will not hit Asian emerging markets’ financial conditions and growth outlook as much as during the taper tantrum of 2013, S & P Global Ratings said on Wednesday.”The recovery across Asia’s emerging economies should withstand rising US yields so long as this reflects an improving growth outlook and reflation rather than a monetary shock,” said Shaun Roache, Asia Pacific Chief Economist at S & P.In 2013, US yields leaped after the Federal Reserve indicated it will begin unwinding its quantitative easing programme. The resulting panic over rising credit costs led to sharp outflow from emerging markets, including Asia’s, and forced central banks to hike interest rates.”Not all yield shocks are created equal,” said Roache.The report highlighted three important factors that determine vulnerability to external shocks in Asia and which are relevant today.One: the nature of the shock. Yields can rise for more than one reason. Some are more .