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Economy

Credit tightening 'dominoes' threaten Asia with hidden risks

Higher interest rates could roil stock markets and upset currency flows

Giant cranes are seen at the Hanjin Shipping container terminal at Incheon New Port in Incheon, South Korea, on Sept. 7, 2016.   © Reuters

HONG KONG/SINGAPORE -- With Asia's economies humming along, consumer prices rising and the U.S. edging toward higher interest rates, markets have been unloading Asian government bonds and sending long-term interest rates soaring. Expectations are growing that Asian central banks will start raising rates soon, in what could amount to "credit tightening dominoes."

This could significantly affect flows of investment funds, creating risks for international financial markets, which might be in for a ride. So far, the currencies and stock markets of emerging Asia have been mostly stable, but there is no basis for unreserved optimism.

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