Are financial markets prepared for the 'reopening trade' in Asia?

TWO distinct features of the economic landscape during Covid-19 have been a surge in household savings and a sharp decline in spending on discretionary services such as eating out, travel and recreation.

Not only did households save more amid caution, they were "forced" to do so as mobility restrictions limited traditional channels of consumption and spending. We estimate the decline in Asian household spending on discretionary services in 2020 could be the sharpest since the 1997-98 Asian Financial Crisis.

In other words, the unique interplay of fallen spending and increased savings implies there is a lot of pent-up demand to be released, especially once the vaccination drives gain sufficient momentum so that social-distancing measures can be lifted durably.