China’s Growing Influence on Asian Financial Markets
August 12, 2016
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Summary
This paper finds that financial spillovers from China to regional markets are on the rise. The main transmission channel appears to be trade linkages, although direct financial linkages are playing an increasing role. Without an impact on global risk premiums, China’s influence on regional markets is not yet to the level of the United States, but comparable to that of Japan. If China-related shocks are coupled with a rise in global risk premiums, as in August 2015 and January 2016, spillovers to the region could be significantly larger. Over the medium term, China’s financial spillovers could rise further with tighter financial linkages with the region, including through the ongoing internationalization of the renminbi and China’s capital account liberalization.
Subject: Currency markets, Emerging and frontier financial markets, Financial markets, Financial sector policy and analysis, Global financial crisis of 2008-2009, Securities markets, Spillovers, Stock markets
Keywords: Asia and Pacific, center, center economy, China, Currency markets, Emerging and frontier financial markets, Equity markets, equity price, Foreign Exchange Markets, Global, growth outlook, market, market movement, Securities markets, spillover coefficient, Spillovers, Stock markets, trade linkage, WP
Pages:
37
Volume:
2016
DOI:
Issue:
173
Series:
Working Paper No. 2016/173
Stock No:
WPIEA2016173
ISBN:
9781475525137
ISSN:
1018-5941
