Asia’s problem of plenty: liquidity


European Central Banker working hard

Inquiring minds are set on The Far East this morning as Western Central Banks shovel money to the East. Marketwatch.com has an article of interest:

The looming prospect of a fresh round of monetary easing by the West’s major central banks is likely to further expand the pool of unwanted liquidity in Asia.

Regional equities could be the big beneficiaries from the rush of money, as regulators show more tolerance of rising stock markets than they do for some other asset classes, analysts say.

But while gushing fund inflows paint a rosy market outlook for the near term, risks include inflation and a possible sudden reversal in liquidity flows, which could have “devastating consequences” for economic growth.

Hopefully, these governments have learned from the very governments giving the money away…

“Central banks and governments [in Asia] are likely to continue trying to resist house-price appreciation, and in some instances, currency appreciation. We doubt that there will be any such intervention on equities,” said UBS strategists, led by Niall MacLeod.

Print money and shovel, print money and shovel, print money and shovel.

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