Ten Years On
At time when global stock markets are correcting and greater volatility is almost becoming the norm we look back on the last ten years to see how Asian countries have performed against advanced economies. Why? Because with the various experimentations with extraordinary monetary policies by major global central banks unwinding we believe that it will be economic and corporate balance sheet fundamentals rather than cheap liquidity that drive valuations going forward.In Asianomics Macro Special report, Ten Years On, 19 December, we compare the performance of Asian and advanced countries. The key takeaway is – Asian economies have outperformed advanced countries by a wide margin but that regional stock markets after rebounding in 2009 have underperformed since 2010.
Asian real GDP, US$ GDP and per capita incomes are significantly higher today than on the eve of the global financial crisis. Corporate profit cycles are recovering or stabilising in the US, Japan, euro-area and in Asia. Over the past years though in aggregate, returns on equity have been higher in Asia than in advanced economies. Overall macroeconomic management has been better than in advanced countries. There are few external imbalances. Asian profits continued to rise in 2018.
With Asian equity valuation looking increasingly attractive we believe that there is still significant upside for Asian financial markets, which will be realised in the coming years, as investors fully acknowledge the region’s strong growth dynamics and underlying fundamentals.
We will say no more, but hope you will read the report.
Wishing you and your families a very Merry Christmas and Happy New Year.
All the best
Sharmila
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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