IN a climate of low global growth and low inflation, some of Asia’s ‘surplus’ currencies may find it more difficult to resist appreciation pressures as they seek to deploy their excess savings abroad
THE Coface global average of country ratings, which measure the average company credit risk in 160 countries, is at a peak not seen since the early 2000s, when the ratings were first created.
Reason 1: Sluggish world economic growth — The global economy remains stuck in a “Japanese-style” trap of sluggish growth, with few improvements even likely in 2017, which Coface believes may be the sixth year in which the global economy grows below 3%. Continuously sluggish global growth has been and is expected to continue to dampen business investment and consumer spending sentiment, weighing on demand.
Reason 2: Low world inflation — Consumer prices worldwide on average are expected to increase only 2.8% this year and by 3.0% in 2017, according to the International Monetary Fund (IMF). This would probably reduce the pricing power of companies, squeezing profit margins.
Reason 3: Sluggish energy and metal price recovery — While the rise in the price of a barrel of oil between February and June 2016 (from less than US$30 to around US$50) offers hopes to the economies that are not very
export-diversified, the price remains 55% below that of June 2014 and does not enable companies to increase profitability in this sector worldwide.
“WE have to be careful not to slip into accidental confrontation,” says Pippa Malmgren. “Right now, opposing fighter jets and spy planes are flying within 20 feet of each other. We could have an accident very
Malmgren, a respected consultant to governments and business, is former policy adviser to U.S. President, George W Bush. She lists some of the key geopolitical risks she sees today – the rise of China; breakup of the European Union; inflation; and the outcome of the US election . . .
XI JINPING’s achievements in his first term have been impressive. One is the anti-corruption campaign, the second, reform of the PLA. Does he have plans to stay on till 2027 — in the Putin mould . . .
GROWTH in trade follows recovery in commodity prices, says CLSA’s Head of Economic Research, Eric Fishwick. It was the collapse incommodities that impacted Government revenue in emerging markets, causing those Governments to pull back on imports . . .
FDI was up 12.5% to US$22.76 billion in 2015 and the drought has broken, allowing the Government to plan future growth . . .
INDIA’s new GST from next year should see an overall reduction in taxes on goods and services as local and national levels of taxes and levies collapse into a single payment. Business is ecstatic as it looks forward to higher growth, more foreign investment, cost savings and a more competitive economy. The unified system should also reduce corruption – and throw new light on the nation’s black economy, currently estimated to be reaping US$1.4 trillion a year . . .
CHINA hopes to build close partnerships with financial institutions, enterprises, multilateral development institutions and governments, says Jin Qi, CEO of the Silk Road Fund . . .
HSBC Group Chairman Douglas Flint asks if Belt-and-Road could be the catalyst for infrastructure to become acceptable as an asset class? “There is huge demand from the retirement systems for long-dated assets,” he says. “Investors are sick of the low growth environment.”
IN its broadest definition/vision, China’s Silk Road project could include 65 countries, involving 4.4 billion people and about 60 per cent of world GDP, says economist Stephen Jen. China has already signed Belt-and-Road MoUs with about 30 countries . . .
ONLY 14 per cent of bank lending today goes to business to enable it to invest, and the businesses that suffer most are small businesses. “The world has changed,” says Efic’s Managing Director, Andrew Hunter . . .
GOVERNMENT pledges to undertake structural reforms, such as liberalising foreign investment and land use, will help catalyse the effects of higher Government spending . . .
MANY ECONOMISTS - agree that Beijing will show “forbearance” toward China’s distressed corporate borrowers, but the same people also agree that Beijing will not be able to forestall a collapse of confidence should an unforeseen “black swan” event occur. For China, the “black swan” could come in the form of a fraud in peer-to-peer (P2P) lending or in China’s online payment systems, such as Alipay. A new scandal would almost certainly lead to destruction of consumer confidence, they say . . .
AUSTRALIA and Singapore are working towards a Closer Strategic Partnership (CSP) modelled on Australia’s Closer Economic Relations (CER) agreement with New Zealand . . .
HE WOULD be the last person to suggest it, but Benjamin Chau probably knows more than most about the intricacies of nurturing business-to-
business and business-to-consumer relationships in Asia. For 20 years he has headed the team now crafting 35 trade fairs, including 11 of Asia’s largest, five of which are the world’s largest, for the Hong Kong Trade
Here, Chau explains how he entices buyers and sellers to ‘dance’
together, and how he creates new concepts to increase visitor numbers. Last year he hosted 37,000 exhibitors and 760,000 buyers from 86
countries and regions, while driving 24 million inquiries through the
HKTDC’s dedicated website . . .
AN ECONOMIC crunch has seen
retail rents drop by as much as half in Hong Kong, creating new opportunities for SMEs to establish a physical foothold in a city importing huge quantities of food and beverages for its tourism and hospitality sector . . .