DJ MARKET TALK : Asia Decoupling Scenario "Not Yet Invalidated" - UBS
0142 GMT [Dow Jones] Common theme in markets is emerging markets will continue to register robust growth - even as U.S. economy cools, says UBS; this view is driving capital outflows out of U.S. and into emerging markets, commodities, with such speculative inflows "being intervened away by central banks and then deflected onto non-U.S. dollar currencies via subsequent central bank diversification activity." Such funneling activity is one driver of USD weakness and will likely persist so long as investors believe inflation pressures in emerging market countries will continue to gradually rise and policymakers respond via currency revaluation. "We have our doubts that emerging market countries are capable of decoupling from a U.S. consumer slowdown, particularly if other major advanced economies such as the UK and Europe deteriorate"; still, Singapore PMI data show index holding above 50 and given Singapore's integration with Asian production cycle "this timely indicator suggests the decoupling scenario has not yet been invalidated." Means short-term bias remains for further USD weakness, stronger equity markets, oil prices. (RXM) Contact us in Singapore. 65 64154 140; [EMAIL PROTECTED] (END) Dow Jones Newswires November 01, 2007 21:42 ET (01:42 GMT) Copyright (c) 2007 Dow Jones & Company, Inc.- - 09 42 PM EDT 11-01-07
