Free Trial

TD: China Sneezes, Asia Rebalances


TD Securities note that "China's economy is likely to continue to lose momentum as the authorities sacrifice short term growth for longer term goals. China's slowdown will be more of a problem for more open trade driven economies in the Asian region. Value chain analysis shows that North Asia is much more exposed, especially Korea and Taiwan. The impact of a weaker China on South and South East Asia will be less marked as they benefit from a pick-up in domestic demand and foreign travel picking up. As such, we expect some rebalancing of growth in the region, with South & South East Asia to take the baton from North Asia. Our expectation for the Fed to hike only in late 2023 suggests a limited impact on Asian FX next year, given what is already priced into the market. We think 2021 FX laggards such as the THB and IDR will likely perform better while 2021's star performers including the CNY and TWD will look less attractive as China's growth slows."

MNI London Bureau | +44 0203-865-3809 |
MNI London Bureau | +44 0203-865-3809 |

To read the full story



MNI is the leading provider

of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.

Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.