What are the headwinds and tailwinds for Asia in 2012?

ON ASIA

Over the past year Asian equities have suffered two bouts of relative underperformance.

The first, between November 2010 and February 2011, came in the wake of QE2 as the market focused on the apparent strength of the Western ‘recovery’ and fretted over the associated risks of rising inflationary pressures and thus policy tightening in Asia. The second, in August and September 2011, followed Standard & Poor’s downgrade of the US and came in the middle of growing fears that the European sovereign debt crisis would culminate in a so-called ‘euroquake’ and the resulting panic sell-down of global risk assets. Against this background the performance of Asian equities in 2012 wil...