Asia - Economic Data & News 01 (Jun 08 - Jun 16)

[winston]

That Roach guy was saying that the Asian consumers cant replace the Americans, Europeans and Japanese ...


Emerging Asia's Recovery 'More Robust Than Thought'

(RTTNews) - Asia's developing economies are likely to grow at a faster pace than previously thought, the Asian Development Bank said on Tuesday. The bank attributed the optimism to the region's strong export-based recovery, robust private demand, and the sustained effects of stimulus policies.

The 45 economies of developing Asia - spanning from countries in the Pacific to Central Asia - are now forecast to expand an impressive 8.2%, well above the 5.4% growth recorded in 2009 and also above the 7.9% growth ADB forecast in July.

http://www.rttnews.com/ArticleView.aspx?Id=1429892

[iam802]

From DollarDex:

Which region is generating the best returns?

http://www.dollardex.com/SG/index.cfm?c ... atMap/home

DollarDex_heatmap.png

[LenaHuat]

Hello iam802
How can U be bored? I have been glued to the live telecast of Chi Chi Chi Le Le Le from the SanJose mind.

[iam802]

L is in very good mood.

[kampungboy]

In today's Business Times.

Published October 15, 2010

Massive US$600b pouring into Asia: Goldman

By NEIL BEHRMANN
IN LONDON

GOLDMAN Sach's estimates that the 'wall of money' that is pouring into Asia is currently at an annual rate of almost US$600 billion or US$50 billion a month. Asia is receiving almost four-fifths of the inflows, estimates the investment bank, or annualised net inflows of around US$480 billion.


This is about 20 per cent higher than the massive inflows that occurred in 2007 and 2008, prior to the global credit crunch.

Goldman Sachs calculates that in the 15 months from April 2009 to June 2010, the annualised pace of foreign exchange interventions in emerging markets amounted to a whopping US$855 billion. Of this amount, emerging market trade inflows were US$280 billion.

The investment and hot money proportion of this inflow was US$575 billion and rising, month by month.

Global investors and companies fleeing from the US dollar on fears of quantitative easing, have been pouring money into euros, Swiss francs, sterling, gold, Singapore and Taiwan dollars, Korean won, gold, other commodities and shares.

In 2007, prior to the collapse of the global asset bubble and credit crunch late 2008, Asia received 61.3 per cent of the capital inflows which were then US$481 billion, calculates Goldman Sachs. Eastern Europe and Africa had inflows of 23.5 per cent of the total and Latin America, 15.2 per cent.

In the present financial flight from US monetary ease and the weak greenback, Asia has received the bulk of the flows. In the first six months of the year, calculates Goldman Sachs, global money pouring into Asia accounted for 78.5 per cent of the total, Latin America, 21 per cent and Eastern Europe and Africa only 0.5 per cent.

'The shift into Asia is broad-based and supports our bias for more Asian FX appreciation against the US dollar,' says Goldman Sachs.

Other Asian currency strategists, such as Brian Jackson of RBC Capital Markets and Morgan Stanley agree and current Asian currency favourites are the Korean won and Taiwan dollar.

The latest move of the Monetary Authority of Singapore surprised the market. The Singapore dollar shot up against the US dollar, European currencies and the yen, following the MAS's decision to widen its bands against a basket of currencies and allow the currency to appreciate.

The currency has since subsided slightly, but alongside the Hong Kong dollar, and Korean won, the Singapore dollar is the most liquid and growing in popularity. Since the MAS has been managing it shrewdly, the Singapore dollar is less volatile than the won.

The big question is how the battle of the yuan is going to get resolved. Mr Jackson, based in RBC's Hong Kong office, is expecting the US dollar to fall to around 6.2 yuan, a depreciation of around 7 per cent, while others expect depreciation of 2 per cent to 5 per cent.

The surge in other Asian currencies in recent months is thus discounting the expected appreciation of the yuan. The same applies to the euro, Swiss franc, sterling and gold.

The fear, however, is that Ben Bernanke, chairman of the Federal Reserve Board, will cause a run out of the US dollar and the instability will ultimately bring about another global market crash with subsequent outflows from Asia.

Brendan Brown, London based head of economic research at Mitsubishi UFJ Securities International, contends that the best solution to the crisis is for China to relax exchange controls and allow the yuan to float freely. Since China is a command economy, such a scenario is unlikely, but China could come out with an element of surprise, contends Mr Brown.

'Chinese corporations, individuals, banks and investment institutions would become totally unrestricted in their purchases of foreign assets, whether in the form of equities, bonds, or monetary instruments,' Mr Brown says.

'In taking such action Beijing would silence at one stroke the chorus of officials in US and Europe calling for a large appreciation of the yuan. The yuan would now be a market-determined currency and the exchange rate now set by the market would be whatever it would be.'

'Markets may now be underestimating the boldness of Beijing under huge international pressure just as they could be overestimating the boldness of the Federal Reserve, next month.'

[kennynah]

i dont see why it should be a surprise that MAS made the move to contain the strengthening SGD...we are at historical high against USD...1.29.... this doe not bode well for our exports and we are a heavy exporting country....

although it may be good in the long run for our currency to be strong, we must not allow it to strengthen too fast....

[kampungboy]

Almost all asian currency is on the rise. I got a shock when I found the exchange rate was 22+baht when I was in BKK last week. I remembered it was still around 24+ a couple of months back. My tips for mama-san also shrinked...

[trendlines]

South East Asia back at all-time-highs!

The last time i showed this chart, price was just hanging below the upper parallel line. Since the breakout, we've had a powerful run in SE Asia, led by Indonesia(which has gone on to all-time new highs). With overbought negative divergences across major indices & the dollar potentially rebounding, we could see a pause here before an eventual breakout to new highs. Support is just below the 170 area on this chart.

[winston]

East Asia heading for economic slowdown, warns ADB

East Asia will post slower growth next year due to a wobbly US recovery, the Asian Development Bank (ADB) warned Tuesday, adding that greater exchange rate cooperation could help safeguard the region.

The fragile US economy and phasing out of economic stimulus has weakened the outlook for East Asia, with growth expected to shrink to 7.3 percent in 2011, down from 8.8 percent this year, the Manila-based bank said in its twice-annual Asia Economic Monitor.

Emerging East Asia may need to erect "temporary" capital controls to battle a surge of hot money flowing into the region that risks increasing "economic distortions and lowering long-term growth prospects," the report said.

With the exception of Vietnam, East Asia's currencies have been surging in 2010, a situation that "will not help" efforts to focus on intra-regional trade in response to sagging demand in the West, said Iwan Azis, head of the ADB's office of regional economic integration.

"The worst case scenario is there will be a currency war and a trade war, but I don't assign a high probability to that," Azis told a press briefing in Hong Kong.

China's willingness to let the yuan rise in value "will be critical," Azis added.

"There is room for every single country (in the region), not just China, to appreciate more," he said. He stopped short of calling for a euro-style currency union, saying that any regional cooperation "is not going to be like Europe".

"The V-shaped recovery has certainly set its course -- it's already there," Azis said, adding that "for 2011, we expect that (growth) will continue to be strong but it's moderating."

The bank's forecast for 2010 remained below the region's 10.4 percent economic expansion in 2007.

"After slowing sharply in 2008 and 2009, the East Asian economies recovered strongly in 2010 which has led GDP growth back closer to 2007 levels," the report said.


Source: AFP Asian Edition

[winston]

Stocks recalibrated

The USA has raised its debt limit, but at what price will it issue paper?

Strategist Russell Napier warns that yields will need to rise to get private investors to fund the fiscal deficit now that Asian central bank appetite has ebbed and the Fed cannot continue to buy Treasuries on the scale it did under QE2.

Cost of capital will rise on a global scale. Equities factoring in high growth and Asian exchange-rate plays will recalibrate, with significant implications for bank, property and resources stocks.


Banks, property and commodities
 Higher rates will slow loan growth and bring nonperforming-loan issues to a head.
 Prefer banks with more conservative loan growth and a deposit franchise.
 Property stocks will suffer due to ebbing asset inflation along with higher real rates.


Cap rates and discount rates on projects will knock valuations.
 Higher real rates and reduced liquidity could hit commodities and resources stocks.

Appreciating Asian currencies
 After the global financial crisis, Asian currencies are appreciating more rapidly as central banks focus on inflation.
 Exporters are set to underperform domestic-oriented stocks, a reversal of the past-10-year trend, which will hit exports and foreign earnings.
 AirChina, KWG Property, Agile Property, China Overseas Land, Reliance Communications and AirAsia will enjoy big gains on foreign debt.
 Importers benefit to the extent that they will be able to hold on to cost savings.


Cost of capital, EVA® and balance sheets
 Only 35% of Asian companies seem aware of cost of capital. There is a risk of value-destroying expansion as hurdle rates rise.
 Greater real burden on highly geared firms: Huadian Power, Kogas and Datang.
 Cash will become a significant asset. More than one-third of market cap is cash for Shanghai Pharma, Oil India, SAIC, Giant Interactive and Extract Resources.

Book valuations and future growth
 Indonesia and the Philippines are at 60% premia to mean PB while Japan, Australia, India and Taiwan are at discounts to 12-year mean PBs.
 Formosa Petrochem, China Unicom, HK Exchanges among others are vulnerable
given premia to mean PB and high valuations for forecast future growth.
 Defensive on PB with low value for future growth are China Mobile, COLI, Sinopec, PetroChina, Posco, KB Financial, Samsung, SingTel, PTTEP and Cheung Kong.


Source: CLSA