The Viewpoint: Will higher rates and oil prices break the capex super cycle?

Investors are concerned about the headwinds that higher rates and oil prices will pose to Asia's macro outlook. However, cost of capital will not be entering restrictive territory for most economies in the region. Real policy rates in Asia have risen 50bps from the Feb-26 trough but are still 160bps off the recent peak in Feb-25, and hikes will be for counter-cyclical reasons. An oil price rise to ~US$110/bbl will be manageable, as policy makers still have some fiscal space to cushion the effects on households;