Volatility across Asia is inevitable: Bank Julius Baer

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Japanese shares were trading weaker today on overnight cues from Wall Street . Japan's Nikkei was down 0.03%, or 5.6 points, at 18,143.92.

 

South Korea's Seoul Composite slipped 0.42%, or 7.66 points, at 1,799.22 while Singapore's Straits Times was flat at 3,622.47.

 

V Anantha Nageswaran , Head of Investment Research, Bank Julius Baer, said the volatility across Asia is inevitable. Speaking on the excess volatility across Asia, he said, "I think the volatility is inevitable given the fact that the bond market is still trying to make up its mind on whether the US economy has turned a corner in terms of GDP growth. Headline inflation rates remain stickier while core inflation rates in the US remains well behaved. Even China has threatened some more tightening measures, after inflation jumped from 1% last year to 3.4% at present. The markets are a bit nervous because at the moment things look like it can't get better than this. There are some tightening clouds on the horizon and that's why the markets are trying to look for fresh catalyst to take it up or down. That's why we see volatility."

 

On whether this weakness in Asian markets will continue through the week, he said, "The Chinese economy looks extremely unbalanced. In fact, the most unbalanced economy in the world is the Chinese economy rather than the American economy. The tendency of the Chinese government has always been to talk a lot more than what they can take in terms of action. I don't think they would do something different this time as the Olympics is coming closer next year. There will be a lot of talk but I don't know if they will bite the bullet and do something to restore the balance in the economy towards greater private consumption and less of investment and exports."