The Fed has finally started the interest rate cut cycle, and the global interest rate cut tide is coming, and Southeast Asia is the biggest winner?

The Federal Reserve cut interest rates heavily for the first time in four years, releasing a loose signal to the central banks of emerging market countries, and the market prospects in Southeast Asia are optimistic.

The central bank's interest rate cut will usually drive the local currency to weaken. For the central banks of emerging market countries, starting to cut interest rates before the Fed cuts interest rates may lead to the devaluation of their own currencies, the decline in investment attractiveness, the rise in import prices and thus the inflation.

As the Federal Reserve officially announced a 50 basis point interest rate cut overnight, other central banks that have not yet started the easing cycle can "rest assured" to join the interest rate reduction club, and these central banks are mainly located in Asia, especially Southeast Asia.

At present, the central banks in Southeast Asia are on the verge of a rate cut cycle.

The Philippines took the lead in cutting interest rates in August, and Indonesia lowered its key interest rate level on Wednesday, supported by strong expectations of the Federal Reserve's interest rate cut. JPMorgan Chase predicted that India will cut interest rates next month, while the central banks of South Korea and Thailand will take action before the end of this year.

Wall Street has previously mentioned that the local market prospects are generally optimistic because central banks in Southeast Asia have more room to relax monetary policy.

Joevin Teo Chin-Ker, the investment director of Oriental Credit Suisse Singapore Limited, is optimistic about the bond and money markets in Southeast Asia:

The real interest rate in Southeast Asian countries is higher than a year ago, and there is room for further interest rate reduction, which is good news for the local bond market.

In the past two months, fund managers have continuously increased their holdings of sovereign bonds of Thailand, Indonesia and Malaysia. For three months, they have been net buyers of Indonesia, Malaysia and the Philippines. These capital inflows helped Southeast Asian currencies become the best performing currencies in emerging markets this quarter.

In addition, the valuation advantages and cheap labor costs in Southeast Asia also provide positive prospects for the local market.

Risk warning and exemption clause

The market is risky and investment needs to be cautious. This paper does not constitute personal investment advice, nor does it take into account the special investment objectives, financial situation or needs of individual users. Users should consider whether any opinions, viewpoints or conclusions in this article are in line with their specific situation. Invest accordingly at your own risk.