Matthews Pacific Tiger Strategy Fall Outlook: Entrepreneurial Companies Capture Growth in Asia

Q: How have countries in North Asia contained the spread of COVID-19? What are some of the challenges ahead related to COVID-19 in South and Southeast Asia?

In China, South Korea and Taiwan, the spread of the virus has largely been contained. Although there are risks of localized outbreaks, the region is benefiting from a strong medical infrastructure, robust contact tracing and a population which accepts health care directives issued by authorities. As a result, economic activity is picking up in North Asia.

In South and Southeast Asia, especially in more populous countries such as India and Indonesia, citizens are still grappling with the first major wave of cases. These countries were forced to ease their lockdown measures because the economic cost was too high—a move which fueled a rise in cases. That said, recovery rates in the region remain strong and testing processes are being enhanced to better contain the virus, which leads us to believe the curve will begin to flatten in the near future.

Q: Amid U.S.-China trade tensions, what are some of the risks and opportunities for Asia's private sector?

On the risks side, we've seen greater market volatility in reaction to daily headlines. At the same time, we have also seen many private companies in Asia being quite nimble and proactive in dealing with the associated risks. Private companies are increasing investment in other parts of Asia to augment supply chains including manufacturing activities and assembly functions. We believe India is an attractive destination given the significant end-market demand potential, while Vietnam is appealing because of the established infrastructure and availability of labor.