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Significance

There is sizeable demand for financial assets and products in Asia that exclude China. However, investor expectations that the US Federal Reserve (Fed) will not cut interest rates more than once this year, plus recently improved sentiment towards China, threaten to cloud the outlook.

Impacts

Stemming net outflows from emerging market bond and equity funds will be a tough challenge.

The US dollar will continue to perform strongly against major Asian currencies in the months ahead.

High inflation will remain a significant concern for many Asian economies in the near term at least.

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