Asian Investors Missing an Opportunity

Currency outflows to a region that is no longer a safe haven

Asian Investors Missing an Opportunity

Collectively, the countries of East and Southeast Asia have mainly themselves to blame for weaknesses of their currencies and the low valuation of their stock markets compared with North America.

Since the outbreak of the Covid-19 crisis, there has been an exodus of billions of dollars in western equity investments from Asian markets. What may be needed now is for Asian investors sitting on still relatively pricey US stocks, and even pricier Treasury bonds, to sell and bring the cashback to an Asia which is relatively cheap and still promises far better longer-term returns.

However, convincing them may be difficult while some countries try to ape developed ones with lockdowns and closures which provide little health protection but immense economic damage, particularly to all trade, domestic and foreign, and to lower-income groups.

Just look at the picture. Japan, South Korea, Taiwan and China have all been running current account surpluses for years, some of a massive scale. In Southeast Asia, Singapore persistently enjoys a double-digit current surplus as a percentage of GDP and Thailand and Malaysia have had consistent persistent surpluses since the Asian crisis of 20 years ago. Only since the Covid-19 crisis has brought chaos to the region are those surpluses likely to disappear – and even that is questionable as imports as well as could fall as much as receipt from goods exports and tourism.

Meanwhile, the Philippines also had years of surplus until 2018 and Indonesia’s deficit has been steady at what should be a comfortable level. Vietnam, once troubled by huge swings in its external position, has been in surplus.

The fact is that for years surpluses generated in Asia have been flowing westward, or to Australasia. Partly this is because countries have kept building foreign exchange reserves which means a focus on liquid assets and hence US dollars and to a lesser degree euros, yen and a few other developed country currencies. However, there has in most cases also been net private capital outflow.

Much of this is hard to track statistically. However, Singapore’s Temasek, though a government-linked company, operates more like a private investment fund. At the last count, it had 26 percent of its investment in Singapore, 26 percent in China and only 14 percent in the rest of Asia combined. That is hardly a vote of confidence in the future of either the developed Asian economies or faster-growing ones like India and Indonesia.

At Singapore’s giant Government Investment Corporation which manages its foreign reserves,  little of its 44 percent in cash and bonds is likely to be in developing Asia and equity investments (other than private equity) in all emerging markets are just 18 percent of its portfolio.

Malaysia meanwhile has for years had large-scale capital outflows driven by social and political issues. Most of this is directed at supposedly safe havens in the west and Australia. About half of Thailand’s direct investment has been going to ASEAN neighbors but some of the biggest companies meanwhile have been investing their oligopoly profits buying heavily overseas, most recently the US$10 billion buyout of the local retail interests of the British supermarket chain Tesco by CP Group.

Hong Kong’s property giants such as Li Ka-shing’s Cheung Kong group have long had most of their non-Hong Kong assets outside Asia – power in Australia, oil in Canada, telecoms and utilities in Europe and ports in many countries.

The Philippines’ limited attraction to foreign investors has meant that the outflow from high-income groups for buying real estate and stocks in the west has meant that its overall capital account surplus has been minimal. Like Malaysia, a constant large deficit under “Errors and Omissions” reflects unrecorded capital outflow and goods inflow (is smuggling).

Other flows come via pension and insurance funds, mostly private, whose investment managers may have a cultural bias towards the best-known western markets, preferring the US to, for example, Sweden as well as the west to Asia in general.

Company size and equity market liquidity is also an issue which often works to the disadvantage of Asian companies dominated by family ownership levels which limit trading and with managements which put family interests before those of the outside shareholders. Big funds are accustomed to dealing in large sums rather than spread thinly over a number of smaller companies whose prospects may be better.

Source : Asia Sentinel More   

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Wildlife, Disease, and the Future

Pandemics are likely to increase in number. This should be a lesson.

Wildlife, Disease, and the Future

By: Gregory McCann

Was it a pangolin, slaughtered in the wet markets of Wuhan, that brought the world economy to its knees and wiped out tens of thousands of humans in 2020? Or was it a bat, also hailing from the dreadful wildlife markets of Hebei, that did this?

It must be acknowledged that health problems stemming from markets are hardly an Asian phenomenon given the fact that animals – pork, beef, chickens and farm-raised fish in the first world -- are often loaded with hormones to spur growth and antibiotics to quell disease and butchered in the most unsanitary conditions.

But that said, the wet markets have reopened in China, and pangolins are still being rounded up, killed and boxed up for export in Africa, bound for mainland ports in the mistaken belief that their scales, dried, roasted and cooked in a variety of ways, can cure excessive nervousness and hysterical crying in children, tranquilize women possessed by devils and ogres and stop malarial fever and deafness.

Potentially dangerous wildlife markets also thrive in Bangkok, in Vietnam, Cambodia, and elsewhere, and bat soup never went out of fashion in Indonesia even as the coronavirus swept across the archipelago, although some are trying to cover this up now.

Have we learned anything yet? Hardly, and we’re still in the midst of the pandemic. One of the most important things we can do besides shutting down wildlife markets is to protect wildlife habitats. Healthy ecosystems are effective buffers against pathogens in animal communities that could jump to humans. In other words, leave forests standing, revoke clearance permits for palm oil plantations and logging and the draining of peatlands, protect the deserts, the oceans, the skies.

It is urban areas where the problems are most intractable. Since 1950, according to the World Economic Forum, the world’s urban population has risen almost six-fold, from 751 million to 4.2 billion in 2018. By 2030, there will be 43 megacities of 10 million population or more, with 66 large cities between 5 and 10 million. As in Manila, for instance, there are vast slums extending for kilometer after kilometer, filled with people with limited or no access to clean water or sanitation. These conditions are a breeding ground for infectious diseases. These dense populations are prone to the spread of disease. Medical resources are scarce at best and nonexistent at worst. There is urgent demand for emergency stockpiles of vaccines and other medical stores to combat disease.

But such stashes are essential. The best defense against the pandemic is anticipating outbreaks, making a greater investment in childhood immunization, greater investment in sanitation infrastructure and preventive healthcare to make sure the most susceptible have the bodily resources to combat the onset of infection. Healthcare authorities need improved observation capability to enable them detect outbreaks as early as possible. Obviously, as the Chinese have learned to their bitter experience, public honesty and openness are essential.  

The sad thing is, too little of that is happening, along with the preservation of wildlands. US President Donald Trump is opening up more lands to extractive industries, rhino poaching is spiking in Africa in the absence of tourism, poachers (likely) are being attacked by sun bears in Cambodia, a tiger killed a “fruit collector” (likely poacher) in Thailand, roads are being punched through Indonesia’s mountains and forests, the great rivers of Laos are being dammed, the Japanese have resumed the hunt for Bryde’s whales in their own coastal waters for the first time in more than 30 years, and illegal loggers in Malaysia are denuding hillsides because authorities are focused on fighting Covid-19. Again, this is just a small sampling.  Experts say the next pandemic is already brewing.

Jim Robbins sums it up well: “Disease, it turns out, is largely an environmental issue. Sixty percent of emerging infectious diseases that affect humans are zoonotic — they originate in animals. And more than two-thirds of those originate in wildlife.” But in the Anthropocene, man is gutting ecosystems and transforming nearly the entire land surface of the planet, with the grimmest prospects for wildlife. Can we really have hope for the future?

There are some hopeful signs. For starters, China is banning the sale of dog meat. The notorious Huanan Seafood Wholesale Market in Wuhan has been closed and there is talk that Beijing will permanently ban the wildlife trade, though this wouldn’t include for traditional medicine, a major loophole. In fact, the Chinese government is said to be recommending bear bile injections as a treatment for coronavirus.

A friend who runs an ecotourism resort in Cambodia’s Cardamom Mountains recently learned that hunters caught several pangolins but couldn’t offload them due to fears about Covid-19. This is another kind of story I want to hear –small and grassroots, but possibly another way to prevent diseases from leaping from the jungle to the cities.

The celebrated Russian writer Valentin Rasputin once wrote: “We have only one Siberia. Here the human race is now being tested to see what it has become in the present and what can be expected of it in the future.” The same can be said of our planet and human society in general today. One thing is for sure: the fate of obscure and highly trafficked mammals such as pangolins and the human race are a lot more closely intertwined than most people ever thought.

In the meantime, the freezing of daily life across the United States and in swaths of Europe has resulted in an astonishing resurgence of wildlife in urban areas. Coyotes are making their way across the Golden Gate Bridge in San Francisco and down Chicago’s Michigan Avenue, cougar families are waltzing through the suburbs of Boulder, Colorado (and in downtown Santiago, Chile, as well), flocks of mountain goats have replaced vehicular traffic in Wales, a rhino recently strolled down a Chitwan street in Nepal and chased a man away, birdsong has replaced honking horns in Times Square in NYC, sika deer are swarming across the Japanese city of Nara, a sloth bear in India rages at a temple, the Himalayas are visible for the first time in decades from the Teria India and Nepal, and endangered Hawksbill sea turtles are nesting en masse on deserted Brazilian beaches normally crowded with people. This is just a small sampling of wildlife taking back what’s theirs.

I love these wildlife comeback stories. I’m cheering for the animals, even as I languish in my apartment in Buffalo, NY watching raccoons and groundhogs take over my neighbors’ front yards. I even try to imagine what the animals are saying to one another: “C’mon, the coast is clear! The humans are finished! They’re DONE. It’s over! Let’s take this shit back!”

Gregory McCann is the author of the book Called Away by a Mountain Spirit: Journeys to the Green Corridor. He writes regularly on the environment for Asia Sentinel.

Source : Asia Sentinel More   

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