March 14, 2022
The historic surge in oil is reshaping the outlook for Asian equity and currency markets, as the specter of prolonged high prices exposes the vulnerability of energy-dependent countries.
Risks of a rise in consumer prices and disruption to current-account balances have triggered strong foreign outflows from equities in markets like India and South Korea in recent days, spurring weakness in their currencies.
A few resources-rich nations, like Australia and Indonesia, are among the beneficiaries as their markets are holding up amid the downturn since Russia invaded Ukraine. Sanctions against Russian oil pushed the price of Brent crude to as high as $139 a barrel earlier in the week.
“There couldnt be a more appropriate time than now for investors to remain well-diversified across assets,” said David Chao, global market strategist for Asia Pacific ex-Japan at Invesco Ltd. “It makes sense to be overweight in natural resources and those countries that are the biggest commodity exporters in energy, agriculture and metals.”
OneProSpecial Analyst
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