SCB's View on QE and the Asian markets

QE3 is likely to increase fund inflows and reduce equity risk premia in Asia. Potential improvement in the US economy in 2012 could help offset equity investors' concerns over the short-term headwinds faced by Asian economies. Korea, Taiwan and Hong Kong were beneficiaries of the previous episodes of QE. Nevertheless, investors may refocus on China and India, given the former's larger valuation discount and the latter's sensitivity to foreign flows.