Punch-drunk traders

Asian Markets on Edge as Trade Policy Uncertainty Persists

A week in which Asian stocks posted both their biggest-ever plunge and their largest one-day gain since 2008 has left investors in the region on edge. The volatility in equities, credit spreads, and currency markets has been fueled by uncertainty surrounding US President Donald Trump’s trade policy decisions and officials’ responses to that across the Asia Pacific.

Financial Professionals on Edge

No wonder financial professionals in the region are on edge. Besides the volatility in equities, Japanese government bonds posted their worst day ever last Tuesday (Apr 8), credit spreads blew out the most since 2000 over the week, the Chinese yuan sank to its weakest level since 2007, and the Indonesian rupiah set an all-time low. The Friday before, the Australian dollar tumbled the most in a day since the global financial crisis.

Impact on Business Plans

Away from markets, all that volatility is also disrupting business plans across the region. Brian Tan, the head of non-China EM Asia economics research at Barclays in Singapore, was in Jakarta for a business trip during the week, which also saw Indonesia’s markets tumble on reopening after the week-long Eid holiday.

Traders’ Concerns

The potential for quick turnarounds in Trump’s policy has traders most on edge. “It’s a weird situation though because you don’t want to be short risk assets, since one person can just flip the switch any time,” said Chauwei Yak, chief executive officer at multi-strategy hedge fund GAO Capital in Singapore.

Conclusion

The volatility in Asian markets is likely to persist as long as trade policy uncertainty remains. Investors and traders must be prepared for quick turnarounds and be cautious in their investment decisions.

FAQs

Q: What is driving the volatility in Asian markets?
A: Uncertainty surrounding US President Donald Trump’s trade policy decisions and officials’ responses to that across the Asia Pacific.

Q: How has the volatility affected business plans in the region?
A: The volatility is disrupting business plans across the region, with some companies experiencing significant losses.

Q: What is the outlook for Asian markets?
A: The volatility is likely to persist as long as trade policy uncertainty remains, making it difficult to predict the direction of markets.

Q: How are investors and traders responding to the volatility?
A: Investors and traders are being cautious in their investment decisions and are focusing on short-term trades to capitalize on the volatility.

Q: Is there a silver lining to the volatility?
A: Yes, some experts believe that the volatility may have a silver lining, as it has shown that the ice investors are skating on is much thinner than most had believed.