Friday, November 15, 2013

Asia's Growing Debt-load: Maybe Not Today's News, But Looming....

I've noted for some time that the growth in credit at all levels, government, corporate and household, especially in EM countries, and especially in Asia, stands out as a major potential economic risk on the global risk-omter!   The markets sampled a tasting of this when US Fed Tapering talk begin in earnest last Spring, which triggered capital flight out of EM equity and bond markets, depressing their currencies, raising risks of imported inflation and exacerbating the already large current account deficit problems faced by many of these countries.  The cooling of Tapering has taken this risk off of the 'triage' list, for now!  But it's clearly looming out there, meaning that any turn up in rates, most probably driven by the US, at some point, could set off the beginnings of a possible credit event with global implications.  It bears watching...closely!
Moody's Analytics' piece below spells it out quite well!  (NOTE:  Moody's Analytics is a subscription service which will only show a 'teaser' of the full piece to non-subscribers.  They do allow subscribers, however, to email the piece to others which makes it available for a limited time.  If you're interested, please reach out to me via the 'chat' or 'email' features on this blogsite).

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(Please note: This article is solely meant to be thought provoking and is not in any way meant to be personal investment advice. Each investor is obligated to opine and decide for themselves as to the appropriateness of anything said in this article to their unique financial profile, risk tolerances and portfolio goals).
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