Asian Decoupling

There is an interesting article from Bloomberg on the issue of decoupling of the Asian global markets from the US. YTD, the Chinese and Indian markets are among the 10 worst performing global markets. One possible explanation is the increased selling from hedge funds in the US as they meet margin calls and put money to work elsewhere. Commodity inflation has also prevented these economies from employing a looser monetary policy. Many company shares in Asia are also coming out of lockup, allowing nervous investors to lock into gains in an uncertain environment. Taiwan, Pakistan, Thailand, and Sri Lanka have posted positive gains YTD, between 2-8%, but given the political and economic issues in these countries, risk premiums are certainly higher.