by Peter Elston, Head of Asia Pacific Strategy & Asset Allocation, Aberdeen Asset Management Limited
The US Federal Reserve (Fed) proposing to ease back on its asset purchase program has sent financial markets into a tailspin, particularly in the emerging world. It had been strongly suspected that the rise over the last year or so in both equity and bond markets was more the result of central bank juicing than improving fundamentals (‘exhibit one’ being government bonds which, if fundamentals were strengthening, should have been falling). This suspicion has been very succinctly confirmed by markets over the last week or so, as markets pre-empted tightening before Ben Bernanke confirmed plans in Wednesday’s speech.
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