Biden’s bailout package can cause investors to withdraw capital from Asia

Biden’s bailout package can cause investors to withdraw capital from Asia

Asia’s emerging markets are most likely victims of the stimulus package of US President-elect Joe Biden as money flows back to the US, according to JPMorgan.

China is forecast to be one of the first markets to be affected by the stimulus package of US President-elect Joe Biden. Photo: AFP

Mr. James Sullivan, Head of Asian Capital Markets Research (outside of Japan) at JPMorgan, a long-established financial services firm, said: “Most investors have a very positive outlook on Asia and other countries. emerging markets against the US “before the details of the latest stimulus package were announced by US President-elect Joe Biden.

“Over the past few months, we have recorded more than 18 consecutive weeks of capital inflows into Asia (outside) Japan,” said Mr. Sullivan, adding that “it is very likely” that investment funds have started to rotate. drawing capital from emerging markets in Asia to the US due to Mr. Biden’s plan to boost economic growth.

US President-elect Joe Biden on January 14 revealed the breakthroughs in the $ 1,900 billion Covid-19 stimulus package titled “America’s Rescue Plan”, which will deploy support. US households and businesses until the vaccine is widely distributed. This rescue plan also includes checks and unemployment benefits.

Sullivan said that JPMorgan had previously predicted that US GDP would be dragged down by 2 percentage points due to the lack of additional fiscal stimulus. Mr. Biden’s stimulus package of $ 1,900 billion was twice as large as the size forecasted by JPMorgan Group, so Mr. Sullivan said that this stimulus package will be a “positive surprise” for the US market as well as for the general growth of the world’s largest economy.

“Capital inflow into Asia has changed very positively in the past few months, but now it is likely to see the opposite,” Mr. Sullivan warned. “I’d say we could have gone half way through at this stage,” the expert added.

According to the expert, China – one of Asia’s best-performing markets in 2020 – is likely to be one of the first to be affected by Mr. Biden’s stimulus package.

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