Fubon Bank (Hong Kong)

Emerging markets has been outperforming developed markets this year. In previous AAA reports, we have over-weighted China and Asian emerging markets which have been outperforming the total emerging markets this year. While we remain optimistic about China and Asian emerging markets for their robust economic growth, we also look for alternative markets with potential to diversify our risks. Russia and Turkey are Fubon Bank preferences.
Russia is a major economy which is still not a member of the WTO. It started to apply for accession to the WTO in 1993 and is very likely to be admitted this year. It is expected that the economic development of Russia will be as fast as China upon its entry to the WTO.
As one of the member candidates for the European Union (EU), Turkey started its preparation for admission in 1963. In 1999, Turkey became an EU candidate and negotiation on its entry with the EU commenced in 2005. To accelerate the process, Turkey has undertaken many reform measures and has maintained its steady economic growth over the past few years.
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We maintain our soft-landing view on the US economy and revise our estimate of changes in the Fed Fund rates that the Fed Fund rates will be varied by only 0.25% to 0.5%, ranging from 5.0% to 5.5%. Owing to the recovering housing market, we expect it is more likely that the Fed Fund rates will be lowered by 0.25% before year end and believe that the US housing market will stage a recovery by year end at its earliest.
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