Goldman Sachs’ historical playbook finds that “higher rates are OK for Asian equities.” Since 1990, there were 35 periods in which U.S. rates rose 50 basis points or more, and 75% of the time, the MSCI All Country Asia Pacific (excluding Japan) Index climbed higher, says Goldman.
The research firm plotted Asian countries as well as Australia according to their growth sensitivity compared to their U.S. rate sensitivity. You can see that the index tends to be positively impacted by rising rates in the U.S. and is relatively growth sensitive.
Across Asia, China, Korea and Taiwan—proxies for global growth—are the most positively affected by rising rates. These three countries are also the highest growth-sensitive areas of the world. That makes today’s situation of economic growth with rising rates a powerful combination for commodity investors. When economies such as China and Korea are growing, their use of commodities tends to expand as well.
On the opposite end of the spectrum, countries such as India, Indonesia and the Philippines are negatively impacted by rising rates, as their economies are domestic driven and do not benefit from rising growth expectations in the U.S.