US To Begin Tapering QE3 Next Year, Says Foreign Investment Manager

KUALA LUMPUR, Oct 23 (Bernama) -- The US Federal Reserve (Fed) is expected to start tapering its quantitative easing (QE) programme as early as next year, says a US investment manager. Franklin Templeton Investment Vice-President Grant Bowers said the QE, which had in the past prompted liquidity flows into emerging markets, cannot be done unless the US economy emerged stronger. "If the QE is pulled back, the economy needs to rise to fill the void and the Fed is waiting for the economy to improve further so that they can take away the monetary stimulus," he told reporters at a briefing today. Furthermore, he said once the Fed removes the QE, the US economy would be transitioning from a recovery mode to expansionary mode. Bower, the lead portfolio manager at Franklin Growth Opportunities Fund and FTIF Franklin US Opportunities Fund, is currently managing investments worth about US$3 billion in the US. On the US government shutdown, he said the partial shutdown was expected to impact the US Gross Domestic Product (GDP) growth in the fourth quarter. However, he said the impact from the shutdown was expected to be manageable and the country's GDP was envisaged to grow between 2.5 per cent and three per cent this year. "That (GDP growth) is good enough. A decent economic growth provides nice yields and we should see this going forward," he said. US-based Franklin Templeton Investment manages about US$800 billion in investments worldwide, of which, about US$50 billion comes from emerging markets. -- BERNAMA