Trend Asia’s Post

Asia represents 2/3rds of global growth, with projected 20% earnings increase in 2024. Smart, diversified investment needs to expanding beyond China to include ASEAN and India. India is a serious, emerging as a tech hub, set to assemble a quarter of iPhones in the coming year or so. Service exports have increased fivefold. Indonesia, with the world's largest nickel reserves, represents significant structural growth. A rising middle class and associated consumer markets, enables diversified investments broader long term exposure to growth opportunities in ASEAN. https://lnkd.in/gWsss7Y4

Co-authored an article on Asia HY with Thierry Taglione After a turbulent few years caused by the shakeout in China’s property sector, Asia HY bond market has found a new equilibrium based on sound fundamentals, attractive valuations and strong returns. The asset class has generated 9.1% return YTD May 2024. Keys points addressed are - strong economic growth prospects in the region. - Asia HY is not just China HY. There are multiple sectors, countries which help generate alpha - valuations are still very attractive even after a strong performance YTD - default rates are expected to be minimal going forward https://lnkd.in/gHQyhHdY

China’s so-called high investment economy needs even more investment to boost its still low capital stock — key to productivity and its longer term growth potential. An overhang in residential property is an obvious and important exception. See my latest Substack post.

So it turns out that I think Stephen Roach has figured out the basic issue which is that China's problem was not overinvestment but misinvestment. There was too much money going into real estate and too little money going into other things. So then the question is what is the "optimal level" level of investment. At that point you just have the neo-liberal people say "let the market decide and whatever the market decides is the best capital allocation." You have two problems 1) the first is that if your answer is "let the market decide" then you get different answers based on how you structure your markets 2) the second is that it's not clear that the market will come up with the best solution. One issue here is that different people have different ideas of what a "good economy" is. You can *define* goodness by saying what the market decides is *automatically* the best goodness, but people in 2024 really aren't into this. https://lnkd.in/gr-zKGKE

The western narrative on China is constantly observing the destruction side of creative destruction without observing the creative bit. Ironically, while the west tries to stimulate its economy by manipulating prices - interest rates, exchange rates and energy costs - China has been allowing the pricing mechanism to deliver capital to where society needs it, before moving on. The property developers were a solution to a problem - the need to move 150m from the countryside over 10 years without favellas and townships emerging- and their funding model allowed the local governments to deliver the necessary infrastructure around it. Their job done, and the system evolving into one of speculation, it was shut down, to howls of pain from the western investors who had bought the developers' equities - and particularly bonds - and yet ignored the warning from the Chinese authorities that the game was up. Key lesson is that China is growing its economy according to its own economic logic - it is not following western rules and any investors assuming it will do needs to listen to what China says, not what western pundits say it should do, The article linked was originally published on livewire in Australia It's not the first on this topic and won't be the last...

this is excellent & super important - it proposes an answer to why China isn't (yet) pivoting to boosting consumption and provides an explanation why doubling down on (manufacturing & exports) for which more investment is necessary - because it's about the quality of (net) investment, its mix, rather than the gross proportion the conventional approach that's been taken has confused stock with flows, and from observing the stock we have the answer - too much real estate

We published a short piece at 'livewiremarkets.com' back at he end of May on China - once again addressing the misalignment between what China does - and tells us it is doing - and the western interpretation of what is happening. We have republished at market thinking and also the more mobile friendly marketthinker substack https://lnkd.in/gKaVX-U7

The Bazooka stimulus! It takes me back to my days working in Asia where I quickly learnt about the bias on property investment over financial markets. There were talks then among finance professionals, individuals and wealthy families that this had to change. Is this the change we have been waiting for? Turning point? Sugar hit? We have had exposure to the Chinese markets for the past few years which have been battered, but staying the course over the long term was key (based on strong fundamentals), and the turn around may have just begun. #emergingmarkets #longterm #buylowsellhigh #china #equities #property #stimulus #recovery

The new issue of Asia News Pot is out. 🌏 Asia's Economic Rollercoaster: This Week's Game-Changers 📈 Asia's IPO Boom: 20 companies set to raise $8.3 billion next week. The biggest weekly volume since April 2022! 💻 AI Chip Development: A $500 million price tag per chip. Is this creating an AI monopoly? 🇻🇳 Vietnam's New Chapter: General Luong Cuong becomes the 4th president in 18 months. What's next for the nation? 🏝️ Bali's Luxury Comeback: 5-star hotels hit 75% occupancy. Is this the future of post-pandemic travel? 🇸🇬 Singapore's $1.8 Trillion Secret: The city-state emerges as a commodities trading powerhouse. Which of these trends do you think will have the biggest impact on Asia's future? Share your thoughts! https://lnkd.in/gPXrAZKQ #indonesia #thailand #singapore #economyupdates #businessupdates