Sri Lanka: At 70
Of the Asian frontier markets the one with the most violent recent past is Sri Lanka. The end of the civil war in 2009 was seen as an opportunity for the jewel of the Indian Ocean to set aside its internal difficulties and re-establish itself as an investment home in South Asia. But despite some good initial progress internal political warfare re-emerged with a vengeance as the corrupt Rajapaksa regime attempted to corner everything in the country.But the then-president overstepped the mark and was ousted in 2015 in a surprise presidential election result. His old party, the Sri Lanka Freedom Party and the long-standing opposition, the United National Party, then formed a government of national unity at the General Election held later that year. But the president and parliament have failed to deliver on their promises. National reconciliation is still to be achieved even as Sri Lanka celebrated its seventieth anniversary in February.
In Sri Lanka: At 70, our regular Sri Lanka correspondent,Dr Paikiasothy Saravanamutta of the Centre for Policy Alternatives, surveys the messy political landscape and concludes that the government needs to redouble its efforts on the corruption front or risk the return of the Rajapaksas. The latest burst of ethnic violence, this time against the Muslim minority, just complicates the issue more.
Beautiful place, beautiful people, lousy politics
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.
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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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