Asian financial markets took last week’s resumption of the US Fed’s tightening cycle in their stride, but bigger tests are likely to come in 2017 if, as we expect, the Fed raises rates further than markets currently anticipate. Asian equities have been broadly stable over the past month. The only two countries that saw significant moves were Pakistan and the Philippines. In the former, the stock market surged by more than 10%, perhaps reflecting investors’ relief following a peaceful transfer of power from former head of the army Raheel Sharif to his successor Qamar Javed Bajwa. In the latter, equities continued to sell off following a further flurry of controversial comments from President Duterte. The stock market is now 17% below its July peak.
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