The 7th in our series of guest posts on the outlook for 2014 is by Frederic Neumann of HSBC
Investors in emerging Asia may be forgiven for looking ahead with a little trepidation. The twin engines of the region’s growth in recent years – cheap money supplied by the US Federal Reserve and China’s soaring demand – are beginning to sputter. The risks that tapering entails were already put on powerful display in mid 2013. On the Mainland, structural reforms, while urgently required, will curb any potential rebound. Plenty to keep markets occupied. Continue reading »
There is much worry among emerging market investors – and policy makers – that it is 1997 all over again. EM currencies have plunged since May. Investors have piled capital into these countries since 2008 and some now fear capital will rush the other way.
Is it 1997 redux? Not in East Asia, according to the World Bank’s East Asia And Pacific Economic Update: most economies here “are in a relatively strong position to face this shock, with significantly lower vulnerabilities than in the run-up to the 1997–98 Asian crises”. Continue reading »
Or, when China sneezes…
China can’t go on growing at over 7 or 8 per cent forever. But as the world’s second biggest economy starts to slow, what will be the effect on the other developing economies of Asia? The Asian Development Bank has issued an update to its economic outlook, and aside from the predictable lowered forecast to headline growth, it spells out some of the knock-on effects of China’s slowing growth to the rest of the region. Continue reading »
Another stimulating note from the always-readable Frederic Neumann at HSBC in Hong Kong, titled An inconvenient truth. In it, he looks at the relation in Asia ex Japan between credit on one side and productivity and growth on the other.
The results are more disturbing than inconvenient. Continue reading »
A quick look at manufacturing purchasing managers’ indices for Asia this year shows a worrying trend. From a positive start to 2013, the numbers for the six countries tracked by Markit Economics/HSBC are gradually slipping down to the 50 mark separating expansion from contraction, and below.
Source: HSBC, Markit
Continue reading »
Snap! The Asian Development Bank has followed the IMF in nudging down its numbers for developing Asia. Both institutions have revised their growth forecasts for the region down the same 0.3 percentage points for both 2013 and 2014 in their July updates to their main April outlooks.
It’s not a surprise: China’s slowing growth has economists rejigging their spreadsheets week by week. The question is: what’s changed? Continue reading »
By Jean-Pierre Lehmann of IMD
Many of us are unlikely to mourn the departure of Mohamed Morsi from Egypt’s presidency. Though to some his forced exit may appear a blow to democracy, to others it heralds the termination of what was becoming a fundamentalist Islamist regime. Egypt, it seems, will not become another Iran – or at least not immediately.
But it is fair to ask: what on earth is going on in the Arab world? It is going in the opposite direction to much of the planet. Continue reading »
By Daniel Hui of JPMorgan
“It is said that enlightened governments… do not mobilise when there is no advantage, do not act when there is nothing to gain, do not fight when there is no danger.” – Sun Tzu
Markets have been captivated by the prospect and imagery of a “currency war” following Japan’s dramatic shift in monetary policy, and the recent 20 per cent depreciation of the yen. The narrative goes something like this: The sharp devaluation of the Japanese yen will be the casus belli which will provoke retaliatory devaluations by other Asian economies in self-defence.
All very colorful, dramatic and scary, to be sure. But to-date this is purely hypothetical, and likely to remain so. Continue reading »
Surprise, surprise. When it comes to words and actions of big companies, yet again we find that rhetoric belies reality – this time courtesy of The Economist Corporate Network.
The Economist group’s emerging markets advisory arm compiles an annual survey of leading corporate executives on their attitudes and investment patterns in Asia. In its report, Investing in an Accelerating Asia?, the group found that investment in Asia by global multinational corporations is lagging the expectations, forecasts and optimism voiced by their top executives. Continue reading »
As budget negotiations in Congress drag on towards the end of year deadline, questions are being asked about the global ripple of the US falling off the so-called fiscal cliff.
Should Asia investors be losing sleep over it? Continue reading »
It is hardly surprising to see mixed economic views of a country or region. But these days, Asia has become a forecasters’ chop-suey of tasty and unpalatable tidbits.
While it boasts growing internal markets, strong capital inflows and still-impressive annual growth among some economies, the region remains vulnerable to global slowdowns, the whims of western central banks, natural disasters and inadequate regional co-operation. Among the growing stream of mixed messages on the region’s trajectory came the United Nations Economic and Social commission for Asia and the Pacific, launched on Friday in Bangkok. Continue reading »
Robust domestic demand, the rise of the middle class and healthy corporate balance sheets are reasons why southeast Asia is being talked up as the last man standing in an otherwise anaemic global economy.
But Thiam Hee Ng, a senior economist at the Asian Development Bank, has sounded a rare note of caution on the region. He points out four factors that should give the boosters pause. Continue reading »
Piyush Gupta, chief executive of DBS, talks to the FT’s Jeremy Grant about Chinese non-performing loans, India’s urgent need for political reform and the booming economies of southeast Asia.
The conventional wisdom for the past six months has been that south-east Asia is pretty much the last man standing in the global economy.
Thailand, Malaysia, Indonesia, the Philippines and Singapore have delivered decent growth, thanks to strong domestic demand and, even as the eurozone crisis and China’s deceleration have buffeted them.
But the region may be starting to slow. Continue reading »
By Udayan Chattopadhyay of Ergo
The US’s decision to suspend some key sanctions against Myanmar is the latest and perhaps most prominent endorsement received by that country’s new quasi-civilian regime.
Global interest has surged, due to Myanmar’s vast untapped natural resources, underexploited agricultural sector and huge underemployed labor force. While there is justifiable excitement – the IMF expects 6 per cent economic growth this year – those new to Myanmar will find that it is hardly virgin territory. Continue reading »