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Emerging Asia Pacific: Economic Review September 2011
by Team of Thomas White International,
After battling inflation for over a year, many emerging Asia Pacific economies are now facing challenges over stimulating growth. A year of persistent monetary tightening in emerging Asia Pacific has unfortunately coincided with slowing growth prospects in the developed world. The U.S. and the European Union are the largest trading partners for many export-dependent emerging Asian economies like South Korea, Taiwan and even China. With economic growth slowing in the U.S. and the European Union, many emerging Asian nations are rightly worried about their export prospects.
Developed Asia Pacific: Economic Review September 2011
by Team of Thomas White International,
Developed Asia Pacific nations continued to face headwinds to growth in September. With factory output across the world slowing down to a trickle, major developed Asia Pacific economies ranging from Japan to New Zealand started witnessing pressure on their economic output. As exports still act as the backbone for many of Asias developed countries, a global decline in manufacturing is causing concerns. A slowdown in the U.S. and Europe also cast a shadow on the economic prospects for Asian nations.
Bob Doll: Why the US is Positioned Strongly
by BlackRock,
Investor unease has risen dramatically over the past quarter in the face of growing concerns about the world's economic and financial health. The focal point has been the intensifying debt crisis in Europe. The issues facing Europe are highly complex, but essentially are underscored by a single question: Is Europe facing a solvency crisis or a liquidity crisis?
The Global ?Old Normal?
by Michael Nairne,
Amidst a torrent of dismal economic news and plunging stock prices, investment horizons have become increasingly short-sighted. The new normal of faltering growth and painful deleveraging appears to be only too true. However, investors capable of taking a long-term, global view will find forces at work that will likely drive resurgent world growth akin to that which occurred in the decades right after World War II.
APEC Forum Convenes
by Robert J. Horrocks of Matthews Asia,
The Asia-Pacific Economic Cooperation (APEC) forum, representing 21 Pacific Rim countries, kicked off a summit this week in San Francisco. The summit will address issues including energy, transportation and womens economic participation in preparation for an APEC heads of state meeting in Hawaii this November. The topics being addressed during the summit are of great interest to those seeking to understand some of Asias long-term growth trends. Female participation in Asias labor force can be quite low.
Asian Bonds Fund Manager Interview: A Misunderstood Opportunity
Global investors remain under-invested to Asian bonds. Exposure is often made through global debt benchmarks; however, these benchmarks typically have low allocations to Asia, may not be particularly active, have allocations to less creditworthy countries and possess limited local currency exposure. Many investment opportunities in the Asian region have been overlooked. Asia provides a diverse set of markets and a broad set of country issuers across the credit spectrum, offering what we believe are good opportunities for investors to enhance portfolio yields.
The Risks of Exchange-Traded Products
by Dennis Gibb,
Every major financial crisis has been foretold by timely but ultimately ignored warnings. At the end of mania, the rush to secure more fees, investment performance and status trumps common sense. In the last few months, the drumbeats of warnings from financial journals and regulators about exchange-traded funds have been sounding. Few seem to be listening.
Emerging Asia Pacific: Economic Review August 2011
by Team of Thomas White International,
Emerging markets across Asia experienced flagging equity prices as fears of a global slowdown, triggered by the downgrade of the U.S. sovereign credit rating and concerns over the debt crisis in Europe, gripped markets. Stock markets in some of the emerging Asian economies flirted with yearly lows. The Asian Tigers including South Korea, Hong Kong, Taiwan, Malaysia, and Thailand reported slower growth for the second quarter ended June 2011. Even China, the worlds second largest economy, reported headwinds to growth.
Developed Asia Pacific: Economic Review August 2011
by Team of Thomas White International,
Developed Asia Pacific countries faced increasing headwinds to economic growth during August. Lukewarm growth figures in developed Western economies such as the U.S. and the European Union are troubling the growth prospects of many export-oriented markets such as Singapore, Japan and Hong Kong. Despite some support from emerging markets, export orders for Singapore and Hong Kong have slowed down substantially. In Japan the current account surplus slid, while the Singapore government revised its export growth figures down for the rest of the year.
No Way Out
by Michael Lewitt,
There aren't enough Steve Jobs and Mark Zuckerbergs to innovate our way out of the Everest of debt we have built for ourselves (and will continue to build for the foreseeable future). The good news (a purely relative evaluation) is that astute investors will find enormous opportunities in today's markets as they increasingly reflect unsustainable fiscal and monetary imbalances.
A Fundamental Investment Strategy for Today's Environment
by Robert Huebscher,
We spoke with Tim Hartch and Michael Keller, who are co-managers of the Morningstar 5-star BBH Core Select Fund (BBTEX) from Brown Brothers Harriman. The fund's strategy is strictly bottom-up, with investments in established, cash-generative businesses that are leading providers of essential products and services with strong management teams and loyal customers.
Emerging Asia Pacific: Economic Review July 2011
by Team of Thomas White International,
China, India, Taiwan and Philippines and other Asian economies seeing inflation accelerate to new highs in June. In most of these countries higher fuel costs and food prices were the primary culprits. While large economies such as India and China hiked interest rates aggressively, many countries increased bank reserve ratios to drain excess liquidity and rein in credit growth. The lone exception to the inflation-ridden scenario in Asia was Indonesia. Indonesia has successfully navigated inflationary pressures by allowing its domestic currency to strengthen strongly.
Emerging Europe: Economic Review July 2011
by Team of Thomas White International,
The European Bank for Reconstruction and Development (EBRD) has sounded a cautionary note for the east European region after a new $229 billion aid package for Greece by the Euro-zone leaders was awarded in July. The bank, which was established to help the former communist states in their transition to market economies, said Eastern Europe and central Asia are at serious risk from the Euro-zone debt crisis, according to a news report published by Bloomberg. Still, the EBRD upped its economic forecast for the current year for the countries where it has investments.
Developed Asia Pacific: Economic Review July 2011
by Team of Thomas White International,
Reconstruction spending in some key countries in the region, like Japan and New Zealand, also played a key role in improving labor markets. In Australia, however, labor markets turned sour as job losses inched up during the quarter. Inflationary pressures have become acute in Singapore and Hong Kong mainly due to labor shortage and a relentless rise in property prices. Economies that depend on China for their export industries are worried about a weakening in the Chinese economy in the quarters ahead.
Weekly Aisa Update
by Robert J. Horrocks of Matthews Asia,
Italys government bond yields have been spiking as investor concerns threaten to become self-fulfilling prophecies that raise the specter of default in Italy and dismemberment of the euro. While, China is stepping more than a little lightly on the monetary brakes, along with other countries across Asia, over fears that inflation is getting out of control. And the markets response is to push up the price of U.S. bonds and sell down equities across the globe. Obviously, slowing growth is of far greater concern to investors than the opinion of the rating agencies.
Pacific Basin Market Overview July 2011
by Team of Nomura Asset Management,
Equity markets in the Pacific Basin edged higher in July despite the ongoing sovereign debt issues troubling both Europe and the U.S. and the pressure from a slowdown in Chinas economy. Smaller ASEAN (Association of Southeast Asian Nations) economies continued to provide support this month, so the MSCI AC Asia Pacific Free Index including Japan and the MSCI AC Asia Pacific ex Japan Free Index closed 1.33% and 0.03% higher, respectively.
Does Government Intervention in Financial Markets Slow Economic Growth?
by Michael Edesess,
As we saw with the Dodd-Frank legislation and the Consumer Financial Protection Bureau, the question underlying the debate over financial regulation is whether it stifles economic growth. Leo F. Goodstadt's book, Reluctant Regulators, provides useful insights from the experiences of Hong Kong and China. It also causes us to ponder whether our measurement of economic growth is fundamentally flawed.
Thailand's First Female Prime Minister
by Tarik Jaleel of Matthews Asia,
Phue Thai?s campaign, ?Thaksin Thinks, Phue Thai Acts? ran on a platform which tapped on Thaksin?s populist program for the rural poor. Thailand is one of Asia?s structurally polarized societies with divisions running along the lines of the affluent population in Bangkok and the South and the rural poor (often farmers) in the North. These divisions have been reinforced by one of the highest ratios of rural poverty in Asia. Although recent increases in agriculture commodity prices have led to a mini boom in the northern region, the income gap is still the widest in Southeast Asia.
Pacific Basin Market Overview ? June 2011
by Team of Nomura Asset Management,
Faced with the imminent withdrawal of the Fed?s QE2 policy, the ongoing sovereign debt woes in the Euro-zone, and concerns over a slowdown in China, the Asian equity markets were at best only able to range trade during the second quarter. The broad indices remained relatively flat, with the MSCI AC Asia Pacific Free Index declining by 0.50% while the MSCI AC Asia Pacific declined 0.87%. As the immediate concerns over the sovereign debt crisis in Europe subsided, a steady recovery in domestic production also helped to lift the Japanese market and trigger a late rebound in equity prices.
Developed Asia Pacific: Economic Review June 2011
by Team of Thomas White International,
Developed Asia Pacific economies continued to face headwinds in June as the outlook for demand from both developed markets such as the U.S. and Europe, and emerging markets cooled. In the U.S., a lukewarm labor market caused concerns about the pace of economic recovery. In the emerging markets, persistent inflation fears were prompting higher interest rates. Both these factors are putting pressure on exports from Developed Asia Pacific economies. Japan, which specializes in exporting machinery and consumer durables, is feeling the heat of a slowdown in demand from consumer countries.
Emerging Asia Pacific: Economic Review June 2011
by Team of Thomas White International,
Emerging Asia Pacific economies continued to be troubled by persistent inflation in June. Almost every country in the region had to either hike benchmark interest rates or bank reserve requirement ratios to rein in lending and credit growth. The monetary tightening effects are largely expected to make capital more expensive and this in turn is expected to crimp growth across many emerging markets. Inflation, which thus far has been more pronounced among food and fuel items, now seems to be spilling over to structural inputs like labor as well.
Turkey: A Rising Power Bridging Europe and Asia
Turkey is the land where the European and Asian continents meet. I asked Carlos von Hardenberg, who is based in Istanbul and oversees our frontier market strategies, to share his views from the center of Eurasia: Since the implementation of the customs union agreement with the European Union (EU) in 1996, Turkey?s trade with EU countries has grown substantially in certain areas. In particular, the Turkish automobile sector has been growing at a fast pace and has become highly competitive. Between 1999 and 2008, auto production in Turkey grew by 285% to 1.15 million vehicles per year.
What Fama and French?s Latest Research Doesn?t Tell Us
by Michael Edesess,
With the high name recognition and respect that the team of Eugene Fama and Kenneth French enjoys in the world of finance, anything they publish warrants attention. Their latest offering, Size, Value, and Momentum in International Stock Returns, offers some interesting data on global equity performance. But they fail to offer any insights that explain the reasons behind their findings.
Developed Asia Pacific: Economic Review May 2011
by Team of Thomas White International,
Developed Asia Pacific economies largely managed to boost output by leaning on exports in May. For some of the economies affected by natural disasters earlier this year, exports proved to be a blessing. Australia, which was affected by floods in February this year, not only managed to increase raw material exports but also gained by the investments associated with its export-oriented mining sector. Earthquake-hit New Zealand and Japan, however, faced difficulties in increasing output. New Zealand, which depends on food exports and tourism, suffered because of a strong domestic currency.
Emerging Asia Pacific: Economic Review May 2011
by Team of Thomas White International,
Aggressive interest rate hikes by emerging markets in the past twelve to eighteen months have started showing some results. Although food inflation in many emerging markets remains at elevated levels, the pace of inflation seemed to slow in some countries. Further, inflation expectations are expected to cool, primarily due to anticipation of record harvest of food grains in many countries. The threat from oil prices, which grew at a menacing pace during the first quarter of the year, also subsided a bit in May. Nonetheless, many central banks across Asia were cautious over monetary policy.
Why Asia is the Epicenter of Oil Demand Growth
A few weeks back we highlighted the strong link between GDP growth and oil consumption by showing you how oil consumption per capita has risen in selected countries as per capita incomes rise. Specifically, we noted the potential for China?s oil consumption?already the second-largest oil consumer in the world?to catch up on a per capita basis with other Asian countries such as Taiwan and South Korea. That?s where we think China?s oil consumption is headed, but this shows how strong oil consumption per capita growth has been over the past 50 years.
Inflation?Which Prices Aren't Changing
by Robert J. Horrocks of Matthews Asia,
Inflation has been one of the big buzzwords in Asia's markets this year. Wages, interest rates and prices for commodities, assets, goods and food have all been on the rise. The problem with much of the discussion is that it treats inflation in all these areas as though they were the same?a single phenomenon that is an unqualified evil. In my view, not enough has been done to distinguish between cause and symptom. Perhaps this is because when one does try to distinguish between cause and symptom, the topic of inflation becomes much more complex.
Common Misperceptions about Asian Investing
by Robert J. Horrocks of Matthews Asia,
During my recent travels and meetings with investors around the world, I have found that interest in Asia is abundant. But what has struck me most is that certain perceptions about investing in Asia permeate regardless of whether we speak with investors in Europe, the U.S. or even Asia itself. I find this an opportune time to address three of the common "misperceptions" about investing in the region. 1: The best way to invest in Asia is by investing in multinational companies 2: To invest in Asia, I must accept higher valuations and 3: When investing in Asia, market timing is very important.
Chart of the Week: Emerging Europe's Middle Class
Middle-class, affluent, bourgeois - they describe a group of people who enjoy a comfortable life, have access to healthcare and, have discretionary income. And across developing nations, there is a growing group that are just settling in to this lifestyle. A few weeks ago we discussed how economic power is gradually shifting eastward and highlighted a McKinsey Global Institute report that showed China, Latin America and South Asia are projected to account for most of the middle class children by 2025. Those regions aren?t the only ones. A surging middle class exists in Eastern Europe as well.
Pacific Basin Market Overview - April 2011
by Team of Nomura Asset Management,
Equity markets in Asia continued to gain ground in April after a volatile first quarter of 2011. Stock markets ended higher as companies reported strong earnings, while expectations that inflation may have peaked out also helped to support market sentiment. Disruption to manufacturing industry supply-chains and ongoing problems surrounding the Fukushima nuclear power plant have continued to weigh on Japanese stock prices, although the market was able to stabilize from the massive sell-off that followed the Tohoku earthquake.
Emerging Asia Pacific: Economic Review April 2011
by Team of Thomas White International,
Faced with persistent inflation, central banks across emerging Asian economies turned more active in the foreign exchange markets during April, aggressively raising interest rates. However, these actions have coincided with a loose monetary policy in the developed markets. Consequently, the investment capital, which typically chases high interest rates, continued to flow from the developed markets to emerging markets, pushing up the value of the currencies of emerging markets. To prevent a sudden appreciation of their respective currencies, central banks turned into buyers of the U.S. dollar.
Developed Asia Pacific: Economic Review April 2011
by Team of Thomas White International,
Developed Asia Pacific economies that were hit by natural disasters during the initial months of 2011 registered mixed economic performance with some countries in the group recovering faster even as other countries are still dealing with the aftermath of the crisis. While Japan, finalized a fiscal and monetary plan, investment-led growth was helping Australia recover from floods. New Zealand, which also suffered a devastating earthquake, showed a considerable rise in dairy exports. Other advanced economies continued to do well, although strong growth has been stoking inflation.
Opportunities in Southeast Asia (video)
Asia presents a wealth of investment opportunities. Economic giants like China and India, with their increasing demand for commodities and natural resources, play a pivotal role for growth in the region, including emerging markets in Southeast Asia. I think the outlook for Southeast Asia remains very positive. Countries like Thailand and Indonesia have seen very rapid growth in the last decade, and frontier markets like Vietnam and Laos, with their strong growth potential, are also very interesting to us.
Q1 2011 Portfolio Commentary
In a nutshell, the Fed-induced "risk trade" is once again at a crossroads with commodity/oil prices and the real economy. You know the endgame is near when the Bernanke/Yellen team dismiss the "bad stuff," much like they did with sub-prime. Investors should be prepared for a possible reversal of some of the above trends as they relate to the US dollar, European Union difficulties, and the potential ending of the credit boom across Asia. Given the high sensitivities and correlations across most global asset classes, diversification can be incredibly difficult.
Emerging Asia Pacific: Economic Review March 2011
by Team of Thomas White International,
Inflation continued to be the watchword for the emerging Asia Pacific economies in March. The world?s second largest economy, China, has slowly but firmly gained control over its banks, whose relentless lending had stoked inflation. Consequently, fears about excess inflation affecting China?s economy are expected to come down over the next few months. However, worries over the damage done to Japan by an earthquake could affect a number of export-based emerging economies in the Asia Pacific region. In other emerging Asian economies, monetary tightening continued at an accelerated pace.
Developed Asia Pacific: Economic Review March 2011
by Team of Thomas White International,
During March, most developed Asian economies faced headwinds to export growth. Continued efforts to tighten credit in China, inflationary pressures and strengthening currencies were some of the factors affecting export growth across many developed Asian economies. However, a devastating earthquake that struck Japan in early March disrupted supply chains across Asia. Japan, which accounts for 9 percent of the worlds GDP, plays a crucial role in the functioning of the global auto and electronics industry. It is estimated that Japan will require another 2-4 quarters to recoup the losses suffered.
Pacific Basin Market Overview
by Team of Nomura Asset Management,
Asian equity markets began the year in a particularly volatile state as they came to terms with regional inflationary pressure, unrest in the Middle East and North Africa, and the natural disaster in Japan. Notwithstanding these negative factors, most markets in Asia rebounded in late March to end the quarter on a positive note. The MSCI AC Asia Pacific Free Index including Japan, however, decreased by 1.4% in the first quarter of 2011, while the MSCI AC Asia Pacific ex Japan Free Index increased by 1.5%.
Powering Up Asia
by Team of Matthews Asia,
Energy is a fundamental building block of all modern economies. As such, it should not be an overstatement to say that the availability, or lack of energy has been a primary driver of growth. This is why it has been imperative for all nations, to secure stable sources of energy. With Japan?s current nuclear crisis and high oil prices causing concern, the topic has drawn recent attention. And as Asia's population continues to climb, the region?s energy demands are also set to soar. China and India, are expected to develop ever greater appetites for energy sources, such as nuclear power.
Japan's Production Shortfall Drags on EM Asia Supply Chain
The amplified shock from Japan?s March 11 earthquake, then tsunami, then nuclear crisis has rippled through the supply chain of its emerging Asia (EM Asia) neighbors. Production shutdowns and weakened demand in Japan began to register in Asia?s trade channels in the weeks following the disaster. As the extent and duration of disruptions to production in Japan become more apparent, the severity of regional supply chain interruptions and the effects on EM Asia's industrial production and export volumes and prices through 2011 can be better anticipated.
Ten Trends that will Reshape the Fund Industry
by Robert Huebscher,
For advisors scouring among thousands of mutual funds, bargains and inefficiencies will be harder to find in coming years. Intense competition among funds for shelf space will not translate to lower fees, and the new class of broad asset allocation funds is unlikely to live up to its marketing promises. Those were among the surprising forecasts from Geoff Bobroff, with whom I met last week.
Postcard from Indonesia
by Lydia So of Matthews Asia,
During a recent research trip to Southeast Asia, I spent time meeting management teams in Bangkok, Jakarta, Singapore and Kuala Lumpur. I always find it valuable to be able to compare growth opportunities and challenges facing various industries and companies within the region while I am on the ground. Compared to a decade ago, these Southeast Asian cities have all developed relatively high levels of urbanization, affording residents and visitors the modern comforts and conveniences of such things as public transportation, financial services and easy access to fast food chains.
Middle-Class Middleweights to be Growth Champions
Over the next 15 years, the number of children in middle-class households in emerging market cities around the world may grow 10 times faster than those in developed countries. This future generation living in places such as China, Latin America and South Asia should drive the demand for goods and services, housing and transportation that extend beyond the basic necessities of life. In McKinsey's report, ?Urban world: Mapping the Economic Power of Cities,? the researchers focus on demographic and economic trends to determine which cities will provide the most economic growth in the future.
Revolution is in the Air: What Upheaval in the Middle East Means for China
The long term growth story in China and Asia remains unchanged. Economic reform and liberalization accompanied by investment and rising wages are creating consumer markets in the world?s most populous region. Higher oil prices inevitably hurt a region that is based so heavily on manufacturing and has a high dependency on imported oil, but this will not result in sustained damage to the economic model. The region?s finances are strong both at the national and at the corporate levels. After good stock performance in both 2009 and 2010 we believe this could provide a good entry opportunity.
China's Urbanization Driving Housing Demand and Car Sales
It?s been an eventful week in Asia. The world turned its attention to Japan as it copes with the most powerful earthquake in the country?s history. The markets reacted, with Asian shares declining and uranium sentiment negative as investors rethink nuclear power. We are optimistic that a resilient Japan will turn from tragedy to opportunity by stimulating its economy through a reconstruction of the nation. This week, China was recognized for an achievement of its own. The country has resumed the leadership as the world?s top manufacturing country by output over Britain and the US.
The Latest, and Most Devasting Supply Shock
It has been a rough year so far in Asia, with unprecedented floods across Queensland, droughts in Sri Lanka, southern India and northern China, the Christchurch earthquake and now, most devastating of all, the Japanese earthquake and tsunami. Of course, there is already no doubt that in terms of human suffering and economic cost, this latest tragedy dwarfs all the others; at times like these, it is very hard to not feel either highly emotional, or completely despondent. As such, in an attempt to gain clarity, it is normal to fall back on history, and rely on it as a guide.
And That?s The Week That Was ?
by Ron Brounes of Brounes & Associates,
The volatility is back. In Jan., the Dow encountered but two days of triple digit moves. In Feb., that number jumped, but only to three. Already by March 11, the index has moved by 100 point or more (up or down) on four occasions this month. Geopolitical events in the Middle East, Asia, and Europe have brought renewed uncertainties to the marketplace and prompted some recent profit taking and maybe even a flight-to-quality into treasuries. This week, the ?nays? had it as the Libyan conflict continued and threats of its spreading to oil giant Saudi Arabia remained fresh on investors minds.
Asia Pacific: Economic Review February 2011
by Team of Thomas White International,
Asian economies recorded some of their best performance for the full year 2010. In particular, Southeast Asian nations witnessed a banner year, clocking their best performance in recent memory. However, although the full year record was exemplary, growth in the final months of 2010 began to cool off. While a rising currency continued to trouble export-based economies, inflation haunted almost all central banks in the region. Central banks, having to choose between raising interest rates and attracting foreign capital, opted to hike rates.
Cross Selling in Asia
by Michael Oh of Matthews Asia,
I recently spent about two weeks in Asia, primarily visiting technology-related companies in Beijing, Seoul and Tokyo. It was nice to be able to contrast these firms in the context of the three capital cities?each at distinctively different stages of their development. Even the difference in air quality levels was visibly evident. While traffic in Beijing wasn?t as bad as I had feared following the recent lunar holiday, it was obvious that China?s automobile culture has taken off, and air quality has suffered as a result. Japan, on the other hand, seemed the most orderly and clean.
Searching for Growth in Asia
by Taizo Ishida of Matthews Asia,
There are many ways one might define ?growth? and go about uncovering it. There are a few key elements I look for: main drivers of growth, sustainability and scope of growth, and market expectations. Many global investors today are seduced by the last several years of strong stock performance in China and India, fueled by robust economic growth. However, economic growth alone does not guarantee good stock performance. In fact, many studies argue that, historically, there has been little correlation between stock market performance and economic growth.
Results 4,151–4,200
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