Asian markets in full swing as investors shake off trade jitters
From stocks to currencies to credit, the rebound from the depths of the April market turmoil has been impressive. MSCI's Asia equities index has jumped 25 per cent to a four-year high, while a slump in the US dollar has powered a regional currency gauge to the strongest since October. Companies are rushing to raise money to capitalise on the market's reawakening.
It marks a sharp reversal from the jitters that prevailed just a couple of months ago, when fears of a full-blown trade war and concerns that runaway inflation will limit central banks' policy room weighed heavily on Asian assets. Instead, a weakening US dollar has created space for interest-rate cuts across the region, with the Federal Reserve's widely-expected easing likely to provide additional tailwinds.
'Stocks have bounced back strongly from their April bottom, and investors are realising they might have been too pessimistic about Trump's tariffs,' said Tomo Kinoshita, global market strategist at Invesco Asset Management. 'Trump is showing more flexibility around his trade policies, and that's driving optimism.'
Take the demand for blockbuster share sales from Hong Kong to Tokyo as an example of the palpable excitement. So far, such deals across the region including initial public offerings have raised more than US$90 billion, a 25 per cent jump from this time last year, data compiled by Bloomberg show.
While Hong Kong has dominated larger deals, Japan's capital market has also hummed along with this week, seeing the highest IPO volume since mid-March.
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Debt capital markets have also roared back to life after a dearth of deals at the height of volatility. Yield premiums on Asian investment-grade US dollar bonds have narrowed to about 75 basis points, edging closer to a record low reached in February, a Bloomberg index shows.
The tightening of Asian spreads is all the more impressive given a surge in US dollar bond sales from the region, with this week seeing the largest volume of deals since March. Asia-Pacific offerings in the US currency have climbed by about 47 per cent this year to US$197 billion, and the total is set to rise on Thursday after several issuers price notes.
To be sure, the recent rebound has been global, as markets around the world enjoyed a relief rally to varying degrees. US stocks have also regained their mojo as the 'sell America' trade lost steam. The Nasdaq 100 is at a fresh record and the S&P 500 is nearing its February peak.
The extent of resurgence in Asia is nonetheless notable, given that the export-reliant region was among the hardest hit by US President Donald Trump's tariffs.
A softer US dollar has bolstered the case for owning Asian assets. A Bloomberg US dollar index is set for a sixth straight month of losses, the worst streak since 2017.
Asian sovereign bonds have enjoyed a surge in inflows as investors looked to diversify and the region's central banks embarked on interest-rate cuts. South Korea has especially stood out, receiving over US$39 billion so far in 2025, according to Bloomberg-compiled data. Local factors such as the removal of political uncertainty following the election of a new president have helped.
'When I think about allocating to Asia, I think about the balance and defensiveness that it offers to the portfolio,' said Leonard Kwan, portfolio manager for T Rowe Price in Hong Kong. 'It's a region that has got better fiscal and external positioning for the countries.' BLOOMBERG
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