Easing into Q4 - The US Fed continues to ease and Asian Markets like it

Written by Sewon Oh || September 23 2013

The US Federal Reserve (Fed) announcement that it will continue the program of quantitative easing (QE) boosted the Asian stock market, but many now worry that this is only a temporary fix.

The continuation of the US Fed's QE program was a surprise to many investors as the conventional wisdom in the market was that the US$85 billion re-purchase program would be tapered down and stopped. Asian markets reacted positively of course and markets around Asian region rose; specifically the Shanghai index has risen 12 percent since it’s year-low point in June.

Although the mainland IPO market is still pretty much frozen, there are IPOs happening on the HK market as companies try to list before the QE does actually start to slow. An example is China Huishan Dairy Holdings Co. which already raised $1.3 billion through and IPO in Hong Kong.

The other side of the coin, however, is “how long FED is going to delay the tapering of QE.” The announcement is really only a temporary delay of the program, and that means when tapering starts, markets around the world will lose part of the momentum to push further economic growth, and stock market will go down. China is also at a very important point, as it has stabled its economic growth after the global recession. Now, Bernanke’s decision is the key for Asian market’s future growth, including China’s.