Irvin Seah, Economist
DBS Group Research
- Recent economic and geopolitical developments have likely paved the way for a few months of reprieve for EM assets
- Iran sanctions waivers may limit the upside on oil price for the time being
- After a sharp selloff, EM asset valuations have begun looking attractive, offsetting the pressure from USD liquidity squeeze
- US mid-term election results are being seen as a potential check on President Trump’s brand of hyper unilateralism, which could reduce frictions over trade and security
- There is however a good chance that this reprieve will prove to be temporary. Iran sanctions could intensify by Q2 as waivers expire; US curves could steepen and USD liquidity tighten if the Fed keeps hiking; President Trump could push for assertive foreign policy through the executive route. Caveat Emptor.