Asia Finding it Harder to Look Through the Energy Shock

Asian markets are struggling to absorb a persistent energy shock, leading to unexpected inflation spikes and a shift toward central bank tightening. The report favors tech-related exporters over energy-sensitive importers in the FX space.

Key Takeaways

• 1.Asian central banks are finding it harder to 'look through' the energy shock caused by the Middle East conflict as inflation surprises to the upside and currencies weaken.
• 2.A tightening cycle is expanding across the region; while Philippines and Indonesia have already hiked, the CBC, BoK, and RBI are expected to join despite current market pricing appearing overly aggressive in some cases.
• 3.Tech-related currencies (KRW, TWD, MYR, SGD) are projected to outperform energy-exposed currencies (PHP, INR, IDR, THB) even as oil prices remain elevated.

Table of Contents

• Asia Finding it Harder to Look Through the Energy Shock
• TRADE IDEAS
• Best Trade Ideas Across Assets
• Disclosure Appendix

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