Asia: turning round and up
Asia (excluding Japan) is a mix of very advanced economies, such as Singapore and South Korea, and emerging markets, such as the Indian and Chinese behemoths.
They don’t have the debt problem of the other advanced economies, including Japan, and have an inherent dynamism. This is derived from a mix of long term positive trends - urbanisation, industrialisation, and, in many instances, favourable demographics.
Ironically, while Europe (including the UK), the US and Japan are desperate for growth, these Asian economies have deliberately been slowing themselves down, to extinguish inflation pressures. If only the problems of the eurozone were so straightforward!
Inflation pressures are now abating, with the “help” of an extra kicker from the downturn in Europe (which is the largest single trading block in the world, and very important for Asian economies for whom exports are vital).
Now action is being taken across Asia to reverse this downtrend, and, without the eurozone-style debt burden, this will work.
Asian economies are close to a new upswing.
Usually their stock markets will anticipate this, and begin to rise ahead of events. However, in the short term the storms reaching out from the eurozone will likely delay a positive response by Asian stock markets. We will be closely observing the performance of Asian markets in coming months, for signs of that turnaround.