Trade Trumps Turkey for Emerging Asia as Funds Ignore Tumult

USD strength, China’s slowing growth are other key factors
U.S.-China spat may worsen before mid-term election: Fidelity

Star and Cresent symbols sit on an assortment of Turkish Lira banknotes in this arranged photograph in London, U.K., on Wednesday, Aug. 15, 2018. Turkey took its boldest steps yet to try to ward off a financial crisis by making it harder for traders to bet against the battered lira and easing rules on restructuring troubled loans that have already topped $20 billion.Photographer: Chris Ratcliffe/Bloomberg

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By Y-Sing Liau and Kartik Goyal

August 16, 2018 at 10:00 AM UTC

Updated on

August 17, 2018 at 3:20 AM UTC

This article is for subscribers only.

Forget about Turkey. The trade war is still the wildcard for emerging Asian currencies and bonds, according to investors.

The lira’s meltdown may have provoked a seizure in Asian markets this week but portfolio managers are looking past the noise to assess the longer-term outlook for the region. They say the road to recovery is littered with obstacles, with the ongoing row between China and the U.S. a major stumbling block, even as low-level trade talks are set to resume.