Chillin' out till it needs to be funded
Q1 delivered another warning from Asian economies though trade data in China and Japan remained subdued on consumption imports. Japanese GDP growth would positively influence fortunes of Asia in general and in particular, Korea and China and therefore the rest of the world, even as recovery in the US heads to petering out early except for some new wild growth in housing ( no green shoots yet?)
Singapore’s GDP grew 10% again as growth volatility keeps putting off investors. The Australian Dollar has been trading to a target below par after 3 years as China’s promised production revival is not counting in base metal imports yet nor looking good for Coal production from mining resource economies in Aussie, Asia and Brazil.
Hedge funds like Hoplite primarily depending on Apple and Amazon for growth would be very delighted with the Asian growth story as Asia becomes the fount for new PE and public FDI investment and avenues close in on US and Europe. Emerging markets, Asia plays compete at the top with US Financials, Aviation and Energy prospects on Fund manager desks this year even as markets lose their gains of Q1 Companies like Baidu, Harley Davidson, Yum brands and Humana survive on growth investments in Asia while a very few like Kraft and Nestle depend exclusively on China. Other US fund manager favorites and part of Hoplite’s portfolio like Coca cola Enterprises and Viacom depend on Latin America and Europe for the growth imperative to score.
Back in Singapore pass thru exports were included in April’s 8.3% growth while it was a big jump on march’s 4% contraction in non Oil exports. The QoQ GDP growth of 10% converted to a annual growth of 1.6%. Last year Q1 translated to a 20% growth in GDP over December
Though we do not compare Indonesia like basis with India (see our earlier chain of reviews on Indonesia), even a country like Indonesia that prompted DBS to buy into the country has 250 mln young people for consumption sectors and Indonesia specific funds from Allianz, Fidelity and BNP have grown around 150% in the last five years ( Research)
Even as ECB stopped liquidity operations with some banks pending recapitalisation after market hours, that recapitalisation is unlikely to be a problem for Europe to shrug off even though Greek exit options mean that Europe will keep likely Asian FDI investors preoccupied. European corporates have been moving out of Europe since 2010’s first EFSF hiccups and continue investing globally with Nestle and Novartis also active in global M&A deals and many car makers improving their take in China and India thru investment . Where things last settled down before the bubble burst in 2007 Central Asian Republics along the Silk route and economies like indonesia, Vietnam and Bangladesh had been set up as potential acquisition and investment destinations by the big investment banks apart fromt he India and China stories and work has hardly stopped in these Economies since growing ther shape of global trade and investment thru the dark years till 2012. China’s FDI figures for April still exceed $8 bln for a single month despite the fall in growth prospects, the crowding of Hongkong and the relative undistrubed peace of Portugese Macau
India reported a growth of FDI to $8 bln for the month of March 2012 earlier as the dust settles down over controversial tax clawback provisions that the Economy constructed to decipher between Hot and long term monies headed to the country. Neighbours Pakistan and Sri Lanka have become favorite banking destinations as global trade shares continue to explode in Asia and the Oil rich Middle East.
European FDI also has an easy destination in Africa apart from the rapid modernisation offered in Latin America though political stability and events in Argentina underscore the continuing of new risks almost at par with Greece leaving the Euro. Japan’s growth of GDP by 4.1% included an almost 1.65% component of reconstruction work thru public spending but singalled the retrn of japanese carmakers in US And Asian markets fully Also at risk is the growth from subsidies for replacing fuel efficient cars that will dampen consumption spending again and Global Capex slowdown means that machinery sector grew less than 1% like for Germany which is the other major Exported of equipment globally and is targeted by Chinese manufacturers for M&A. The Japanese have to intervene frequently to dumb down the upmoves in the Yen as Chinese exports and Chinese FDI is yet to get sorted out though Japan’s Asia relations have improved considerably from 2008-9
As of now, US recovery seems excluded from the Asian mix though almost all by accident as US gets busy with reviving the mortgage and Housing market which seems likely to nder perform in 2012 though imprving considerably on the 2011 fail.