Emerging Markets Could See Rally Into 2019, Says Jefferies Darby

The video discusses the impact of US equities on Asian markets, highlighting a relief rally and potential easing in financial conditions. Optimism is noted in Asian markets, with upgrades in Vietnam and Indonesia. Japan's economic outlook is examined, focusing on monetary policy and corporate governance issues. The potential of China's market is explored, considering trade tensions and tax relief measures.

What factors contributed to the recent relief rally in US equities?

• High inflation and economic slowdown

• Rising oil prices and tightening financial conditions

• Well-behaved long bonds and a drop in oil prices

• Increasing interest rates and strong dollar

Which Asian countries have seen an upgrade in market weightings recently?

• South Korea and Japan

• China and India

• Vietnam and Indonesia

• Thailand and Malaysia

What is the expected impact of Japan's GST change on its economic policy?

• Tightening of monetary policy

• Increase in interest rates

• Loose monetary policy to counter fiscal tightening

• Reduction in government spending

What has been a significant issue in corporate governance in Japan?

• Lack of transparency in financial reporting

• Strong personality issues in leadership

• High levels of corporate debt

• Inadequate regulatory oversight

What is the outlook for Chinese equities despite trade tensions?

• Highly negative due to ongoing trade wars

• Neutral with no significant changes expected

• Bearish due to falling real estate prices

• Modestly bullish due to cheap valuations and tax relief

What is the role of the Central Bank in China's economic outlook for 2019?

• Reducing money supply

• Increasing interest rates

• Maintaining a very loose policy

• Implementing strict monetary policies

What is a potential benefit for the equity market in China in 2019?

• Introduction of new trade barriers

• Decrease in foreign investments

• Increase in export tariffs

• Significant tax relief for consumers