Asian equities have delivered solid returns in the first four months of the year, largely buoyed by a pickup in the global trade cycle which has boosted economic growth and led to a turnaround in earnings expectations. Meanwhile, the Trump-related risks flagged in January have failed to materialise. For all his bluster during his campaign, President Trump has thankfully adopted a more pragmatic approach when dealing with international issues. He has backed off from labelling China a currency manipulator and in dealing with North Korea, also reaffirmed that the US will continue to be a major military presence in the region. Trump’s failure to repeal Obamacare has also lowered expectations of his ability to implement tax reform and deliver on his huge infrastructure spending programme, thus lowering inflationary expectations. The USD has been the main casualty in the reversal of the Trump reflation trade, and provided Asian markets with a favourable environment in which to break higher. The table and chart below shows the year-to-date performance and current valuations of various Asian markets. Currency movements have contributed significantly to returns in several markets – notably Korea, Taiwan and India.

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