Military action in Syria fuels Asian market anxiety and increases oil prices

As President Obama considers military action against Syria following suspicions of using chemical weapons during an August 21 massacre that claimed more than a thousand lives, costlier oil prices are expected to come in tidal waves in Asia. This market anxiety has caused worry among investors that rising oil prices could further weaken economic growth in the region.

Image Source: foreignpolicy.com

 The New York Times reports that benchmark crude oil price per barrel has leaped from $107 to more than $112 by the start of September.

The impact of this oil price hike will be felt in several Asian countries, since import bills are expected to increase. Other than that, the threat of fuel inflation complicates policy makers’ efforts in advancing economic reforms.

Image Source: npr.org

 This slowdown gave the Indian rupee its steepest decline in years. While stocks in Hong Kong and Japan fell more than 1.5 percent, one of the leading performers in 2012—the Philippines—lost 3 percent of its benchmark index.

This slowdown in Asian economies has pushed many investors to shift focus on other business opportunities outside Asia, like the US and Europe.

Image Source: thefiscaltimes.com

 “A lot of cash flowed into emerging markets in the last few years as investors searched for yield,” says Andrew Sullivan, the director of sales trading at Kim Eng Securities, Hong Kong.

“Now that Western economies are showing signs of turning around, these flows have been reversing. Investors are seeking the safety of returning their cash to nearer home,” Mr. Sullivan adds.

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