Ceteris Imparibus
In this month's Asianomics Group Strategy Report, Ceteris Imparibus, we turn our attention to the burgeoning trade war between the United States and China. Many people hope that it is a flash in the pan and that rationality will prevail in the next few months. We doubt that will be the case. All the signs are that President Trump has bought in completely to the Neocon playbook of Chinese containment. As we explain in the report, there is no economic logic whatsoever to the imposition of tariffs on Chinese goods plus there is much muddled thinking in terms of the benefits created by exchange between private sector actors. But governments have never been very good at seeing the big picture. When people who produce nothing get a political agenda bit between their teeth there is no stopping their stupidity.The bigger question is, how will economic actors perceive their future prospects and act to protect them? That is where governments lose out. They can talk all they like with each other and act all they want to the detriment of global growth and their own people but private sector actors are likely to continue making decisions in their best interests. Market sentiment might think that China is the loser because Trump and his allies are taking a 'hard line' against Chinese intellectual property and "fair trade" abuses. They are oh so sadly wrong in doing so.
Asianomics, founded by Dr Jim Walker in 2007 and based in Hong Kong, specialises in economic analysis research, cross-referencing their work with credit cycles, profit cycles and cash flows. Asianomics focus is on developments in the Asia-Pacific region, and they also cover developed markets like the US and Europe.
The Austrian Economics model provides a framework for the economic research. The basis of the School of Austrian Economics is that economies work more efficiently and effectively when companies and individuals are free from excessive interference by government and special interest groups. The Asianomics economic research team includes Deputy Chief Economist Sharmila Whelan who is recognised for non-consensus thinking and her depth and quality of primary research, and Chief Economist Dr. Jim Walker.
Asianomics’ subscribers have access to regular economic commentary, stand-alone Country Reports, Special Reports and Investment Strategy Reports. Dr. Jim Walker also provides weekly webcasts.
Dr. Jim Walker is regarded as one of Asia’s leading economists. Prior to setting up Asianomics, he was the Chief Economist at CLSA Asia-Pacific Markets, where he worked for more than 16 years. He has achieved numerous ‘Best Economist’ rankings in the Asiamoney, Institutional Investor and Greenwich surveys of fund managers.
Previous successful calls include:
- In 1995 Dr. Jim Walker wrote about the prospect of Asia being forced off its de facto dollar peg “within the next two-three years”. The Asian Crisis, precipitated by the Thai baht devaluation, began in July 1997.
- Forecasted the US 2007 downturn and financial sector meltdown in series of ‘Apocalypse’ reports.
- Called early the upswing in the Indian stock market in the final quarter of 2013.
Recent Recommendations:
- Overweight China - We are overweight Chinese equities with momentum improvement in the economy.
- Short Sterling, Long Renminbi - China’s currency offers good upside with a positive carry.
- Short European Financials, Long Indian Financials - This is the simplest pair trade to play superior demographics and growth in Asia relative to the region with the biggest problems.
- Long EM Asia, Short Developed countries - South and SE Asia, and direct investors from North Asia, are ‘buy and hold’ investment bets.
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