SINGAPORE (Sept 15): Risk to Asian equities from earnings is falling, with consensus estimates looking at 2.1% earnings growth after the latest reporting season, compared to 1.9% previously. However, van der Linde warns that new risks are emerging as a result of a steeper US yield curve. “Higher US bond yields and a steeper yield curve could pour some cold water over Asian credit and, in light of the high correlation between Asian credit and regional equities, Asian stock markets,” van der Linde says. “Asian equities do not perform well in such an environment.”According to van der Linde, the markets that have historically been most sensitive to this are Indonesia, the Philippines and Thailand. “We see three approaches to investing in Asian equities that are relevant in such an environment: look for structural themes, focus on best-in-class companies and remain focused on yield,” says van der Linde.

Source: The Edge Markets September 15, 2016 07:18 UTC