Our key position in Asian emerging market equities faced headwinds towards the end of 2017 but appears to have regained lost ground over the past month. Many economies in Asia are export-oriented and many currencies, while not explicitly pegged to the US dollar, remain managed against the greenback. A weaker dollar against the major currencies could serve as a tailwind for Asian corporate earnings. Stronger global economic growth should buttress demand in the region and valuations remain favorable compared to developed markets. The fundamental case for emerging Asia is sound, but political risk from the Korean peninsula or rising interest rates and tighter monetary policy could place downward pressure on regional bourses.
