Our iconic Asia Pacific Executive Brief or ‘Asia Brief’ provides a monthly snapshot of the latest key economic and political developments in 14 Asia Pacific markets that are likely to impact regional firms. The Asia Brief is complemented by an extensive Excel workbook featuring data and hundreds of charts for download and use in internal reports and presentations.
Asia Pacific Executive Brief – May 2017
The rise of China’s Xi Jinping and his OBOR initiative
How Asia will work from 2018 onwards was partly on show in May at the One Belt, One Road (OBOR) meeting in Beijing. Chinese media set a new benchmark in adulation for the event, as it is central to Chinese politics this year. OBOR is President Xi Jinping’s personal initiative, which he launched in 2013 as part of his “China Dream”. It has since evolved into a US$1 trillion plus funnel for offshore spending covering 60 countries.
… while ratings agencies fret about China risk
It is certain that Xi’s China Dream does not include a financial crisis that would equal the one that laid America low in 2008. Yet, fear of such a bust saw the ratings agency Moody’s downgrade China one notch at the end of May to A1. The risks are real and the downgrade is appropriate, but this is old news to everyone in China, including the regulators who currently are trying to unwind risk arbitrage in the finance system. The debt, and Beijing’s deleveraging strategy, will affect China’s market well into the next decade, but we don’t expect a financial bust in the next few years.
Political stability returns to South Korea
The election of President Moon in South Korea ends a debilitating, year-long crisis that undermined government and the market. While he is from the left, he appears to favour centrist policies. His election brought a jump in consumer confidence, which should feed into better domestic demand.
Prepare for GST risk in India
India aims to implement a very complex GST on July 1. Some in India say they are well prepared, but many appear not to be, and the government’s last minute scramble to clarify crucial details isn’t helping. Companies are likely to limit sales as July 1 approaches to avoid being caught under both the many old taxes and the new GST. Once implemented, we expect at least 18 months of confusion and potential cash flow problems.
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