More importantly, while EMEs accounted for about 55% of global GDP since 2009, their contribution to global economic growth was as high as 80%. So, a slowdown in EMEs will be an impediment to recovery in the US and other advanced economies. 15. Fifthly, zero interest rates and QE have indirectly widened the income gap. Because of ultra-low interest rates and excess liquidity seeking better returns, stock and property markets rallied in many parts of the world. This is especially true in places with more promising growth prospects like Mainland China, Hong Kong and Singapore. However, lowincome groups, with little if any stocks and properties, have missed out altogether. And their savings in deposit accounts have earned next to nothing. This has exacerbated inequality, resulting in negative implications for social stability and harmony. 16. Sixthly, zero interest rates and QE have changed the global investment environment. Yields on the traditionally more conservative bonds and fixed income investments have declined. For example, 10-year US Treasuries’ yield has fallen from 5% to about 2%, and some sovereign bond yields in the Eurozone have even plunged into the negative. At the same time, both the exchange rates and bond prices in EMEs have experienced sharp swings recently. With the soon-to-start normalisation of US interest rates, and distorting low-returns and high-volatility in the bond markets, the investment environment will become even more complex and difficult. 17.
In 2014 alone, $ billion was spent in share buyback, bringing the cumulative amount to $ billion since 2009. As we all know, share buyback may buoy share prices and boost earnings per-share in the short run, but will not improve a company’s productivity and competitiveness, nor create any new jobs. 13. Thirdly, with the US financial system awash with liquidity from QE and with feeble domestic demand, excess liquidity soon found its way to emerging market economies (EMEs), such as China, Brazil and Russia, in pursuit of higher returns. Between the outbreak  2  BIS central bankers’ speeches  of the global financial crisis and the peak in 2014, total inflows to EMEs were estimated to be some $ trillion, with roughly $ trillion of it destined for Asia. In the face of the massive inflows, EMEs experienced currency appreciation, an increase in money supply, an expansion of the credit bubble, overheating in the economy and asset markets, etc. 14. Fourthly, the tide will eventually turn. Currently, with a strong US dollar and the imminent normalisation of US interest rates, EMEs are confronted with capital outflows, currency depreciation, and sharp falls in energy and commodity prices. Their economies and asset markets are coming under varying degrees of downward pressure, which will adversely affect the US and other advanced economies. EMEs have grown much larger in the past decade or two. In particular, China’s GDP ballooned from $ trillion in 2000 to $ trillion in 2014.