Rising bond yields in the US pose a risk to Asian stock markets, as higher yields could push up the cost of equity for companies in Asia and undermine valuations, warns HSBC. The bank said that while it was not expecting any immediate impact on its own business, there were risks from rising interest rates across Asia. 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. " The Philippines, Indonesia, and Thailand, are most vulnerable, say HSBC analysts.
Rising bond yields in the US pose a risk to Asian stock markets, as higher yields could push up the cost of equity for companies in Asia and undermine valuations, warns HSBC. While Asian stocks have fared better than their US counterparts this year, however, HSBC points out that: "As we face the risk that central banks might not bail investors out, the curve will steepen. 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." The Philippines, Indonesia, and Thailand, are most vulnerable, say HSBC analysts.