Breaking news

Investors Seek Safe Havens in Asia Ahead of U.S. Election

by THEFUTURE.TEAM

October 30, 2024

As the U.S. election approaches, investors are selling yen and moving into cash, Indian assets, select parts of China’s markets, and Singapore dollars, anticipating shifts in global financial flows. Asia’s markets are poised for volatility based on the election outcome, prompting fund managers to reduce exposure to vulnerabilities in Japanese manufacturing and Hong Kong stocks while exploring opportunities in more stable regions.

“We actually view China as a decent place to hide,” said Jon Withaar, manager of an Asia special situations hedge fund at Pictet Asset Management. He noted that China has strong domestic drivers and a lower correlation with global market movements. “The best thing for us to do is just sit on the sidelines and wait,” he added.

Follow THE FUTURE on LinkedIn, Facebook, Instagram, X and Telegram

With the November 5 election approaching, betting odds favour Republican Donald Trump over Democrat Kamala Harris, leading to market reactions like selling U.S. bonds and buying dollars. In Asia, the low-yielding yen is being sold off against the dollar. Nick Ferres, chief investment officer at Vantage Point Asset Management, remarked, “We sense that Donald is going to win, and it might even be a Republican sweep.” He added that “the implication for the dollar is Trump is probably a bit more pro-growth.”

The yen has dropped 6.5% against the dollar through October, marking the largest decline of any G10 currency.

Investors are targeting markets less exposed to tariff risks and buoyed by demographic trends and China’s expected stimulus initiatives. Ray Sharma-Ong of ABRDN stated, “The Singapore dollar would stand tall against regional currencies,” while Indian stocks may offer insulation due to strong domestic growth and a low export-to-GDP ratio.

John Hempton, founder of Bronte Capital, expressed uncertainty: “I honestly don’t know what Trump can achieve. If I genuinely don’t know what I’m doing, then I just try and stay out of the way – try to minimize the damage.”

Goldman Sachs has noted increased exposure to China and North Asia among emerging market funds, which could accelerate after the election. “We see emerging markets equities to be well placed to outperform next year regardless of the outcome,” said Gary Tan, portfolio manager at Allspring Global Investments, highlighting potential benefits from a Harris win.

Cyprus’ Economic Resilience Affirmed: Fitch Confirms ‘A-‘ Rating Amid Fiscal Strength

by THEFUTURE.TEAM

May 24, 2025

Strong Fiscal Fundamentals and Robust Economic Growth

The international credit ratings agency Fitch has affirmed Cyprus’ long-term rating at A- with a stable outlook. This decision reflects the nation’s strong public finances, a significant reduction in debt levels, and steady economic growth. Officials at the finance ministry welcomed the move, describing it as a robust vote of confidence in the government’s prudent economic policies.

Notable Budget Surpluses and Debt Reduction

Fitch highlights Cyprus’ high primary budget surplus, projected at 4.3% of GDP for 2024, alongside a dramatic drop in public debt from 73.6% of GDP in 2023 to 65.3% by year-end. The surplus soared to 5.6%, marking the highest level in nearly two decades, largely due to rising revenues and disciplined spending. The agency forecasts continuous improvement with debt falling further to 52.6% of GDP in 2026 and potentially nearing 45% by 2030, assuming current trends persist.

Follow THE FUTURE on LinkedIn, Facebook, Instagram, X and Telegram

Economic Performance and Labor Market Strength

Cyprus’ economy is projected to grow at 3% for both 2025 and 2026, following a 3.4% expansion in 2024. A robust services sector and a healthy labor market are propelling this growth, with employment rising by 2% in 2024 and unemployment declining to 4.5%, close to record lows.

Market Vulnerabilities and External Challenges

Despite these positive developments, Fitch underscored persistent vulnerabilities, including a high current account deficit — estimated at around 7% of GDP over the coming years. This deficit, among the highest in the EU, is offset by sustained foreign direct investment (FDI) flowing into a diverse range of sectors. Additionally, while Cyprus’ banking system remains stable with a top-tier CET1 ratio of 24.5% and declining non-performing loans, long-term risks persist due to governance issues relative to other A-rated peers and exposure to regional geopolitical tensions.

Outlook and Policy Implications

Although Fitch’s model initially rated Cyprus at A, external risks necessitated a one-notch reduction. Future upgrades will hinge on continued debt reduction and narrowing the external deficit. Conversely, a downturn in public finances or a severe external shock could precipitate a downgrade. The finance ministry stated that the report is a testament to Cyprus’ steady economic trajectory, highlighting the ongoing commitment to responsible fiscal management as essential for bolstering both competitiveness and stability.

In conclusion, the agency’s assessment reinforces Cyprus’ sound economic fundamentals, while also flagging areas that require ongoing vigilance. As the government continues to implement strategic economic reforms, the outlook remains cautiously optimistic amid the broader global economic uncertainties.