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  • Only in today's market mood could the words gradually, cautiously and probably, be thought hawkish.

  • Janet Yellen's rate rise hints made last Friday were still enough to weaken emerging market currencies in Asia on Monday.

  • But local equity markets; however, managed to shrug that news aside.

  • Once again, the Fed's move highlights or rather it's just its comments highlight the struggle to balance global macro with local conditions in emerging Asia.

  • Views on global emerging markets or EM still tend to the heavily negative.

  • While currencies are bearing the brunt of this,

  • analysts say they find little interest in any bullish trading ideas and there are periodic reports of net outflows from bond and equity funds.

  • If it isn't the impact of weak commodity prices on already slowing economic growth, then there's the debt hangover that follows a multi-year credit binge.

  • Net-net, EM Asia actually gains from weaker commodity prices because Indonesia aside, it is a net importer.

  • Credit meanwhile, is more of a risk for both businesses and households in the region, following years of easy borrowing.

  • And yet there is still a bullish case to be made for companies in EM Asia.

  • Leverage is high but seems to have peaked.

  • Margins are steadying and a decline in return on equity appears to have bottomed, according to a study in New One by HSBC.

  • ROE improvements are, says the bank, being held back by a regional tendency among executives to hold cash.

  • This now accounts for 18% of total assets, up from 12% three years ago.

  • At least, inefficient companies stuffed with cash have some easy room for improvement.

  • Current earnings expectations are hardly excessive either.

  • After years of starting with sort of earnings per share growth of 10% plus each year,

  • then revising lower as the numbers come in and disappoint, analysts have swung the other way.

  • They're forecasting just 3% growth in Asia, excluding Japan earnings for this year.

  • Last week, global emerging markets began to inform, outperform developed world equities for the first time in three months.

  • Now, near term performance will continue to depend on the comments and the actions of Ms. Yellen and the Federal Reserve.

  • But probably, investors gradually and with caution of course, should consider the EM world more carefully, starting with Asia.

Only in today's market mood could the words gradually, cautiously and probably, be thought hawkish.

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