Emerging Asian markets have attracted sizeable fund flows this year and have consequently performed relatively well. This performance was not necessarily the result of strong fundamentals, but more a perception of relative safety offered by these markets in a world of great uncertainty.

The unexpected slowdown of the US economy in the early part of the year raised concerns over what was just about the only appealing growth story within developed markets. The presidential election campaign highlighted the risks of potentially major policy changes in fundamental areas such as US adherence to trade agreements, its relations with Mexico and China, and commitments to alliances around the world.

Worries over Europe’s continuing economic travails were compounded by the British vote to leave the European Union (Brexit). This, combined with the migrant crisis and deepening fears of a banking crisis in Italy, made investors more conscious about extreme scenarios in Europe. The failure of the Bank of Japan’s (BOJ) monetary policy to weaken the yen and reignite inflation also contributed to the perception that central banks were generally running out of ammunition to keep deflation at bay in developed economies.