Investor confidence in shaky EM Asia markets should improve

ON ASIA

Investor confidence in emerging Asia's fundamental strengths was shaken last year as continued monetary tightening, especially in China and India, and a slowdown in exports resulted in a moderation in economic growth.

China and India had been the two countries in emerging Asia that significantly tightened monetary policy in the past 12 months to control high inflation. Investors were increasingly concerned about a hard landing in China as the government kept a tight control on liquidity in the system and took steps to curb its residential property market. As we progress through 2012, things are getting better. Inflation, for one, has started to fall. This, coupled with the mediocre economic growth prospects of developed markets, means central banks in emerging Asia are in a position to loosen monetary...