Results 501–550 of 555 found.
A Market Story
It is not the headline rates of growth in Asia that excite me?it?s the profit-making opportunities within those economies that are necessary to sustain reasonable rates of growth and support the changing lifestyles of Asian households. And that, I hope, is a sentiment with which both the old and the reformed Scrooge might embrace.
A China Traffic Report
Few are optimistic that Beijing will be able to solve its traffic problems any time soon. Many locals I met with lament that there are simply too many wealthy individuals in Beijing to curtail the growing car consumption. Analysts also agree that government measures related to auto sales in China will have limited impact; and they note that Beijing accounts for only about 7% of the total new car market in China. With car penetration still at low levels in China, the trend for car consumption should only increase.
Weekly Asia Update: Postcard from China
Automation is one of the many possible solutions for China. There is plenty of room for China to catch up with its industrialized Japanese neighbor. China?s current level of industrial automation is comparable to that of Japan in the early 1980s, based on the percentage of computerized machine tools, the market size of the core machinery components needed for factory automation, and the level of automation in vehicle manufacturing.
Postcard from Bangladesh
While some foreign investors may consider Bangladesh a ?frontier? market, its market capitalization already surpasses that of Pakistan, Vietnam, Sri Lanka and New Zealand. I believe there is a good chance that this market will be a more integrated part of the Asian investment landscape soon.
Postcard from Bangkok
I recently spent several days in Bangkok, visiting companies during what was my first trip back to Thailand since 2008. Tourism (which is 6% to 7% of total GDP), has been a chronic issue of political unrest since the military coup in 2006. Political risks in Thailand have posed concerns for many foreign and domestic investors in the past several years, and a stable political environment is undoubtedly crucial for economic growth. However, company fundamentals are arguably just as important for the bottom-up investor.
Decoupling, Further Defined
Emerging market equities? particularly those sectors most associated with decoupling themes?are now subject to elevated valuations. It appears that some investors have grown overly convinced that decoupling is a one-way, short-term bet. Don?t bet on it. Instead, take your time, and set any expectations for decoupling over the longest horizons.
Postcard from Australia
Thanks to its abundant natural resources, Australia managed to escape the recent global financial crisis largely unscathed as it has enjoyed a wave of industrialization from emerging Asian countries. Economic ties between Australia and Asia have broadened from the resources sector to other sectors. Australian financial companies have formed joint ventures and subsidiaries in emerging Asia. One Melbourne-based insurance firm I met with on my recent trip entered into an agreement with the largest bank in China to jointly develop and distribute life insurance products there.
Tensions Resurface on the Korean Peninsula
North Korea remains a constant thorn in the side of Asia and an irritant to regional peace?this much is clear to South Korea, Japan and the U.S. Perhaps this is also increasingly clear to China, which has thus far given the impression of being too tolerant of the North's actions.
The Korean Discount: Getting What You Pay For?
South Korea can be a frustrating place for investors. The country?s companies exhibit such potential and yet many of them trade at a significant discount to their peers both globally and in Asia. My last visit to Korea reminded me of why equities of Korean companies are often not priced in line with the value they create. There have been many attempts to rationalize the discount, with explanations ranging from threats posed by an unpredictable North Korea to the cyclicality of many Korean businesses. However, I believe the issue of corporate governance merits most attention.
Indonesia--Rubber Must Hit the Road
For a decade now, corporate capital expenditure in Indonesia has grown at a rate much faster than that of the overall economy, but from a woefully small base. Even today, such expenditure hovers near 2% of GDP. By contrast, India?another county that has suffered from chronic underinvestment in the past?has managed to expand its investment to 7% to 8% of GDP. If Indonesia is to meet its potential and live up to the lofty expectations of investors, there is no time to lose: rubber must hit the road.
Effects of Quantitative Easing on Asia
While the U.S. intends to stimulate its domestic economy with quantitative easing, the actual effect of QE has been to turbo-charge emerging markets, especially the markets of Asia. There is some concern that short-term portfolio flows or 'hot money' could cause sharp price volatility, and we will continue to monitor these effects and their implications on Asia.
Postcard from Vietnam
As much as two-thirds of Vietnam's GDP can be attributed to strong personal consumption in a country of 86 million (with an average age of 26). Over the past 20 years, the country has shown impressive economic expansion, averaging 7.1 percent growth per year, which has pushed GDP per capita up to just over $1,000 U.S. Although Vietnam still faces potential problems with inflation, it is still encouraging to witness the real changes taking place in the country's consumer behavior.
Postcard from Japan
The stereotype held by many overseas investors is that Japanese companies have slow growth, low margins, low capital efficiency and lots of cash but nothing to use it on. Investors must not forget, however, that Japan is still the third-largest economy in the world. With a gross domestic product of more than $5 trillion U.S., there is more than enough room for small entrepreneurial companies with innovative ideas to achieve growth, even in Japan's domestic market. Although these companies are still the exception, they are growing in numbers, representing the emergence of a new Japan.
Promoting Peace Within India
The recent verdict by an Indian high court over an age-old religious dispute has brought some of the challenges associated with investing in India back into the limelight. India's legal and political legacy systems do impose delays in resolving such conflicts, but the country is making some notable progress on clearing up some of these issues.
Evolution of the Asia Bond Market
One of the most profound developments in the history of Asia's capital markets has been the deepening of the domestic bond markets over the last decade. The largest Asian issuers can now diversify their funding sources across both international and domestic currencies. While China's bond market is the largest in Asia outside of Japan, it remains largely inaccessible to most foreign investors. Korea's local currency-denominated bond market is the next-largest at just under U.S. $1 trillion, making it the single-largest bond market readily accessible to offshore investors.
Postcard From Korea
Already a popular destination for Japanese tourists for many years, Korea is now also becoming a top destination for Chinese travelers. Affluent Chinese buyers are attracted to the island not only for its clear waters and calm weather but also for its proximity to China - a 90 minute plane ride from Beijing. If Korea can restyle itself as a premier travel destination, a strong tourism industry could significantly benefit the Korean economy. Tourism is already a major industry in many other countries and can be another source of growth for Korea in the future.
Postcard from Japan: Before the Dawn
Matthews Asia portfolio manager Andrew Foster recently returned from Japan, where he met with companies from a variety of industries. As in past trips, many of these companies seemed to be resting on their laurels, even as present growth was flagging. During this most recent visit, however, a subset of companies in different industries seemed to share a realistic outlook, combined with a sense of urgency to improve performance. Each of these companies cited the strength of the yen as a key factor that would allow them to execute overseas acquisitions, especially in the U.S.
Postcard from India: Delhi Prepares for the Commonwealth Games
The Commonwealth Games, which will be hosted this year in Delhi, offers India a distinctive brand building opportunity. The preparations for the games have surely ramped up Delhi's severely strained infrastructure. The city has made significant progress towards construction of an intra-city train network and an international airport terminal. Preparations have also given employment to hundreds of thousands of construction workers, and will likely prove positive for the country's tourism. As an offshoot, it might also inspire more investment in developing India's sporting talent.
Indonesia Updates its Facebook Profile
Millions of Indonesia's citizens are using mobile phones to access the internet and stay connected via social networking websites like Facebook. Indeed, with its rising household income, and youthful and large population of 240 million, Indonesia has the potential to be a major market not only for traditional businesses, but also for new businesses such as mobile internet. Companies that can capitalize on such trends by adjusting their business models and offering new services should also present attractive, long-term investment opportunities.
During the second half of 2007, market commentators debated over 'decoupling' - the idea that Asia may somehow be immune to the vicissitudes of the Western economic cycle. Markets are now worried about slowing momentum in the recovery of the developed world. Matthews Asia chief investment officer Robert Horrocks explores decoupling in the current economic environment.
Chicken Soup For Seoul
While its economy has mostly recovered from the global economic crisis, Korea may need to do more to develop and sustain new sources of growth. The country's small and medium enterprises still find it hard to increase the scale of their current operations because the larger conglomerates seem to be getting stronger and crowding out the domestic market. The Korean government may need to adopt a softer regulatory touch and further reform its financial sector in order to provide a more conducive environment for newer industries and businesses to prosper.
Postcard From China
As a result of rising incomes and infrastructure build-up, tourism-related industries are growing rapidly in China. In recent years, the number of budget hotels (which have room rates of below US$30) has grown at an outstanding pace, now with nearly 4,000 in China, up from about 500 in 2005. Not only are Chinese tourists traveling more within China, they are also taking more international trips. It seems that China is gradually expanding its consumption power outside its own borders - to the delight of its neighbors in the region.
Postcard From Korea
During her recent trip to Korea, Matthews Asia research analyst In-Bok Song met with several companies that have been making consistent preparations for the next leg of growth in their core businesses. Though their success remains to be seen, there were a few commonalities in their approach. The most apparent one is their entry into China. Another is structural reorganization, which aims to generate synergies within related business and to strengthen core competitiveness. These efforts in Korea's underlying economy help define the foundation for the country's sustainable economic growth.
Malaysia, Truly Asia?
Malaysia will need to proceed further down the path of liberalization in order to ensure that it stays relevant in an ever more competitive environment and truly grow with the Asian continent. Fortunately, over the past few years, policymakers have scaled back parts of the country's affirmative action system and placed emphasis on the expanding the services sector - both of which are long-term positives that could bode well for Malaysia relevance, not just as a tourist destination, but for long-term capital appreciation.
Much effort has gone into trying to understand the elements of 'risk' and 'uncertainty' for investors. Matthews' Chief Investment Officer Robert Horrocks tries to bridge the gap between what academic theories define as risk and the experience of practitioners - particularly when it comes to managing Asian equity portfolios. In an environment in which risk is not clearly or reliably defined, he cautions, be humble.
Postcard from Inner Mongolia
Inner Mongolia, not to be confused with Mongolia, is a province in northern China recently visited by Matthews Asia research analyst Winnie Phua. Two dairies in the region command 60 percent of China's dairy market. Unlike most other agricultural industries in China, the dairy business underwent consolidation fairly early on. Over the past decade, it has witnessed rapid production growth of more than 20 percent each year thanks to industry consolidation efforts and increasing milk consumption. These efforts provide insight into how other consolidating industries in China may fare.
Postcard from Indonesia
On paper, Indonesia has made big strides, with annual GDP growth of more than 5 percent in the last several years - including in 2008 when most markets suffered. The country's stock market has also been the best-performing market in Asia since late-2008. But if you stand in the middle of Jakarta you somehow don't get that sense. Indeed, there are still challenges to overcome: infrastructure woes, the country?s widespread poverty and a government lacking checks and balances.
Postcard from China?s Yangtze Delta Region
During a recent trip, Elizabeth Dong visited Nanjing, Hangzhou and Ningbo, second-tier cities in the Yangtze Delta region to visit factories that make such items as auto parts, optical components, processed foods and apparel. The companies, which collectively employ about 280,000 workers, are bellwethers for China's labor-intensive manufacturing sector. While some factories offer workers pleasant working conditions, many laborers operate in poor environments with noise pollution, toxic fumes and extreme room temperatures.
Postcard From Behind the Wheel in China
After experiencing swift growth in 2009, China has become the world's largest auto market in terms of unit sales. With approximately 80 manufacturers now competing for a share of this immense market, China's car industry is also quickly becoming the world's most competitive. The argument for investing in this market is compelling. Not only is penetration so far still low, and thus full of potential, the industry is growing faster than China?s overall GDP. This is not to say, however, that the growth will be in a straight line
Postcard from the Shanghai Expo
Two weeks ago, Matthews Asia portfolio manager Andrew Foster attended the 2010 World Expo underway in Shanghai. The theme of the expo, 'Better City, Better Life,' is intended to demonstrate the benefits of better urban planning, smart growth and a stronger emphasis on the environment. Its message was juxtaposed, however, against the reality that much of the country's growth has been fueled by construction and heavy investment. And while the expo does illustrate China's first steps toward openness, fewer than 2 percent of event participants came from abroad.
Postcard from India
It is easy to get carried away with the potential of a full economic revival of rural (and consequently, agricultural sectors) within India. Some of the recent strength can be attributed to new policies by the central government, including guaranteeing employment for 100 days. The early results of these policies are encouraging, but the impetus needs to be sustained in the form of more forward-thinking investment in social infrastructure, including health and education. Nonetheless, it is hard for any long-term strategy focused on India to ignore the potential of these smaller markets.
Contemplating Capital Controls
Some Asian countries have imposed capital controls as a measure to prevent asset bubbles. Policymakers are clearly wary of imposing further controls on capital. However, they cannot prevent the bubbles they fear by using monetary policy alone?until they allow their currencies to appreciate. Otherwise, they are simply allowing international investors to enjoy the high interest rates that tighter policy brings at the existing cheap exchange rate and capital will flow in.
A New Direction: China Eases Currency Peg
China?s central bank announced over the weekend that it would reform the exchange rate regime for its currency, the renminbi, and allow it more flexibility. While the RMB should rise against the U.S. dollar in the near term, any movement will be small and gradual. The more important long-term impact of China?s RMB reform is the acceleration of structural changes to reduce the country's reliance on exports and grow more reliant on domestic consumption. China?s central bank officials have said that a more flexible currency will 'direct resources to domestic demand-driven sectors.'
Chinese Bank IPO: A Test of Faith
Bank loans account for the vast majority of capital raised by China?s non-financial sector. The corporate bond market is still extremely undeveloped?at the end of last year, the size of China?s corporate bond market was about 3.3% of China?s GDP. Banks have been reformed over the last two decades, but still have a way to go. A recent IPO is an important step in that direction.
Prospective China Homebuyers Face New Challenges
With little cooling of the property sector in sight, in April the Chinese government stepped in with tougher measures to curb housing prices. So far, these policies seem to be effective as we are seeing drops of more than 50 percent in property sales in major Chinese cities. Developers are preparing for a slow market over the next two to three months as prospective home buyers adopt a wait-and-see attitude on purchases. Over the long run, however, the prospects for China?s property market appear to remain sound.
Changing Channels: Asia's Shifting Media Mix
A combination of rising consumer demand, emerging technology, market forces and gradual regulatory reform is transforming Asia?s media landscape. Research analyst Elizabeth Dong explores the ways in which China?s publishers and local governments are pushing for reform, and India?s traditional media marketplace has been transformed by private entrepreneurs and foreign players.
Postcard from Chengdu, China
Yu Zhang reflects upon a recent week spent in China. The general sentiment on the ground is quite positive, underpinned by a sustained pick-up of economic activity carried over from last year, and people are also becoming more confident about their own well-being. As China rebalances its growth model and allows its western regions to catch up to the east coast, cities like Chengdu, which have enjoyed a relatively low-cost advantage, are developing a lead in new, fast-growing industries and have the potential to be the next growth engine of China's economic development.
Tensions in Korea and Thailand
What both Thailand and Korea have in common is that their underlying political tensions have been ongoing, certainly for long enough to have earned their markets a valuation discount. This is not to say that investors are in any way protected from such political unease - for if the events were to flare up into a serious conflict in either case, more property damage and loss to asset values would occur in both countries. Nevertheless, Thailand and South Korea remain the two cheapest markets in the region in terms of price-to-earnings measures.
Postcard from Korea
Michael Han recently returned from a visit to Korea. The country?s overall consumption and economic activity looked quite solid, based on first quarter GDP growth, despite soaring fruit and vegetable prices due to an unusually cold spring. Given that just 13 percent of Korean exports are destined for the European Union, the overall impact from Europe?s troubles appears limited. Home prices have stabilized or fallen in some areas, but lending in Korea remains cautiously healthy thanks to stringent historical lending standards.
The Next Frontier: Business Services in Asia
Thanks to improved education levels, Asia now has a bigger pool of quality human resources seeking better employment of their skills. Meanwhile, the cost of this labor in Asia is rising. One area that therefore needs to evolve in Asian economies is business services. Continued productivity growth is one of the most important benefits we can expect from evolving business services. Software and information technology services would arguably have the most direct impact on productivity growth in the industrial, commercial, distribution, technology and health care sectors.
India's Infrastructure Constraints
With India?s higher economic growth rates, its social and physical infrastructure is becoming increasingly strained. Even though India has years of catching up to do on infrastructure investment, there have been some early signs that the government is awakening to the problem and starting to take action. One positive response to bureaucratic shortcomings has been the emergence of a new model of public-private partnership that substantially shifts infrastructure-related financial, operational and technical responsibilities to the private sector.
In the context of Europe's sovereign debt problems, we do not expect Asia to become a safe haven for investors in the near term. As solvent as China?s sovereign debt position is, questions still remain over the borrowing by local government investment vehicles during the recent stimulus plan and property boom. This is not a benign environment for Asia?s equity markets. But we do take solace in the long term, because these events once again show the relative health of Asia?s economies.
Postcard from Vietnam
During his recent visit to Hanoi and Ho Chi Minh City, Matthews Asia's Elizabeth Dong had the opportunity to compare some of Vietnam's emerging sectors, as well as some more well-established industries, including its telecommunications industry?one area in which Vietnam has surpassed its neighboring countries. The government has anchored its monetary policy on the depreciation of its currency, the dong. A depreciating currency makes goods cheaper and wages more competitive, which in turn increases foreign direct investment and promotes exports, but also causes high inflation
India's Focus on Investor Protection
India?s financial sector watchdogs have demonstrated their independence time and again. For example, the country?s central bank, the Reserve Bank of India, was one of the few central banks that chose to break from prevailing global loose monetary policies. India?s other regulator, the Securities and Exchange Board of India, which is equivalent to the Securities and Exchange Commission in United States, has also come a long way in asserting itself. Formed in 1992, SEBI has been making systemic reforms aimed at better corporate governance, deeper capital markets and more satisfied investors.
Overinvestment in China
The evidence for overinvestment in China seems to be thin - on the contrary, returns on capital have been stable and rising, suggesting that the productivity of the underlying economy remains strong. The government has tools to combat any concerns about overheating - including interest rates, reserve requirements and allowing the currency to appreciate. This commentary also includes a roundtable discussion with the Matthews Asia Funds Investment Team on a possible China bubble.
Postcard from Japan - A Pleasant Surprise
While most Japanese companies are still cautious over the medium term, the tone is certainly becoming upbeat. Management teams are gaining confidence as the economy recovers, which bodes well for the outlook on capital expenditure and consumption. With their high operating leverage, profits at Japanese manufacturers tend to rebound quickly when sales start to grow. Japan has been the best performer among major global equity markets so far this year, and we hope to see further improvements soon.
Postcard from Korea
Korea avoided serious trouble related to the global economic crisis of 2008, and some senior government officials project GDP growth as high as 5 percent this year. The country's economic progress may be partly due to its import substitution strategy. Under government leadership, Korean firms created industries by copying or reverse engineering products that were first created by more advanced countries decades ago. Korean companies are also leveraging relationships with China and other emerging Asian markets.
Another Step Toward Gender Equality in India
India's upper parliamentary house recently passed an historic bill that would reserve one third of its legislative seats for women. Women currently account for one tenth of India's members of parliament. The passing of this contentious bill is an early step in the process of amending the country's constitution. Even though India's constitution is quite progressive when it comes to gender issues, Indian women still face inequality in many areas. Placing more women at the top of the political food chain could be instrumental in furthering equality in other aspects of Indian society.
Results 501–550 of 555 found.