As Asia's banking sector navigates a peak in global interest rates and risks of slower growth, investors are wagering that banks in India and Indonesia have the strongest loan and profitability profiles to provide returns next year. Over the past 18 months Asian central banks tracked the U.S. Federal Reserve tightening monetary policy to battle inflation, but their interest rates hikes were smaller and slower, resulting in better interest income for the region's banks without loan growth suffering. Banking indexes in India, Indonesia and Thailand have all outperformed the broader MSCI Asia ex-Japan index as well as the S&P banks index since March 2022, when the Fed started raising rates.
As Asia s banking sector
navigates a peak in global interest rates and risks of slower
growth, investors are wagering that banks in India and Indonesia
have the strongest loan and profitability.
Asian stocks briefly made
one-week highs on Wednesday, bonds rallied and the dollar sank
on new hints at U.S. interest rate cuts, while the New Zealand
dollar jumped after its central bank said.
Nomura Holdings said
on Wednesday it would reduce risk weighted assets by up to 6%
and make additional cost cuts in its wholesale business as the
top Japanese investment bank scrambles to shore up.
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