KUALA LUMPUR: Markets in
developing Asia have proven surprisingly resilient a month after Brexit.

A report
in the Financial Times said policymakers had been appropriately cautious over
the past few weeks in the face of a series of unexpected political shocks, from
Brexit to the Turkish coup attempt to a series of terror attacks in Europe.

However,
in Malaysia, the FT report said, the local bond market had shaken off not only
global events but also local problems, including the fact that US and Singapore
regulators were taking action over fraud claims connected to 1Malaysia
Development Berhad, backed by Prime Minister Najib Razak.

So far,
it said, the search for yield had trumped political risk.

It said government officials, who had been worried both about the prospects for
exports amid downgraded global growth forecasts and domestic demand, should be
pleased.

They were
pleased with Bank Negara Malaysia’s rate cut earlier this month but want
further pre-emptive support to ensure stable growth momentum.

Some of
the central bank’s staff think this unnecessary, since the economy looks on
track to hit the official growth estimate of 4-4.5 per cent for this year.

Najib’s
ability to shake off his critics so far is rooted in a strong economy and in
keeping unemployment down, so the government will keep pushing for further rate
cuts and this is likely to prevail before the end of the year, the FT report
predicted.

In
Indonesia, the central bank signalled that further interest rate cuts were
possible after it held steady last Thursday, but noted that market rates have
been responding to the 100 basis points worth of easing already undertaken this
year.

The
report said the recent tax amnesty bill had helped improve investor sentiment.