Asian markets might not anymore rely on funds originated from US and EU and instead will rely on domestic funds where this event might not let the release of higher interest rates for long term to the share holders. This is due to low trust and confidence of the companies with public assets. Every market is based on trust and many investors are those who are interested in foreign investment signals. When a negative signal transmits the risk – the one like trade war – the domestic funds go for less risky funding based sectors in economy of the type money instead of finance.
It’s clear that the trade war is hurting China as a core economy among Asian powers. The collapse of other Asian countries is evident as China itself has based its economy to some great extends on continental benefits. Malaysia, Indonesia, South Korea and even Japan will hurt from a chain of events predictable from the coming new year 2019.
The decisions made by EU and US are also very important. The investors always listen to the warning signals forcing them to direct their money to the money sector such as banks. This is really dangerous for Asian markets. If US, on the other hand, get the trust of some foreign investors such as Saudi Arabia and force it to fund only in US and also to put sanctions on certain countries such as Russia, much of the investment problems in the west block will be solved.
The more divergent policies among Asian countries mean the more benefit for US as the flow of investment will come back to US if it keeps the trust of investors and let them to interact in a stable market. Stability of the US market at the moment rooted in the instability of the Asian markets.
It seems that in near future US will get the trust of two or more Asian countries to make that divergence possible for China. Another fact is that, US might let some banks, under specific certificates, to enter finance sector, something that’s illegal in many countries.
The good part of this strategy is that the money blocked in the banks will circulate in stock markets under the permission of US administration which will benefit companies in the market. This, however, must be done to buy shares of certain highly trusted companies that have already created more jobs. This will reduces the risk of bankruptcy for the banks and also will contribute to the elimination of joblessness.
Directing banking funds to stock markets is just a short term solution at the moment. It seems that US has a high potential for directing such funds into markets.
