Editorial»
Top 10 wishlist for Asia
JAN 02 - It has been a pretty good year for Asian
economies and markets. War in Iraq was a drag and North Korea got weirder than ever, but Asian growth boomed, stocks soared and the region’s leaders flexed their muscles. The MSCI Asia Pacific index, a regional equity-market benchmark, is up by a third. Asia has been home to the world’s most dynamic economy - China - and an Asian company, China Life Insurance, made the world’s biggest initial public offering of shares this year. Even Japan looked better after 13 years in and out of recession.
Yet while Asia has much to be joyous about this holiday season, many problems and challenges are bubbling under the surface. Here are 10 things the region could use in 2004:
Homegrown growth: Asia was the world’s fastest-growing region in 2003. Investors were enthused by economic reforms introduced since the 1997 financial crisis and by stock markets that traded at lower valuations than in the United States and Europe. Yet Asia has a stubborn vulnerability: exports. Yes, the region has made progress toward bolstering domestic demand; a quick walk through shopping malls in Bangkok, Kuala Lumpur or Seoul proves that. But Asia is still too reliant on economies like the United States. It still needs wealthier and healthier consumer markets.
A spokesman: When markets are in turmoil, the West has powerful personalities like Alan Greenspan or Jean-Claude Trichet who can step to the microphone and soothe jumpy investors. Their actions and words reassure people that “we’re on top of things.” Asia has no one like that, leaving a leadership vacuum that often makes investors wary. Asia needs a go-to guy.
A dollar rally: Asians are getting increasingly antsy about the U.S. currency’s 10 percent decline versus the yen this year, which basically means the region’s other currencies are rising, too. Fear of losing competitiveness has central banks at the ready to sell currencies. What Asians would love to see is a rising dollar that takes pressure off their economies. The trouble is, U.S. imbalances are making a stronger dollar unlikely. Record fiscal and current account deficits point toward an even weaker dollar in 2004.
A more vibrant Japan: Notice the use of the word “more” here to modify “vibrant.” Asians have long since stopped relying on Japan. Though it may be Asia’s biggest economy, it is no longer a source of growth for the region. Economies are now looking to China to play the role of regional locomotive. Still, a Japan that is holding its own is better than one in crisis. As long as its bond-market bubble doesn’t burst and its banking crisis doesn’t send shockwaves around the region, Asians will be better off.
Love between Beijing and Taipei: Strong growth and rising stocks will be no match for a military conflict between China and Taiwan. Up for re-election next year, President Chen Shui-bian of Taiwan may play the independence card. Beijing, which considers Taiwan a breakaway province, has threatened war if Taipei declares independence. The United States would be forced to take sides between Taiwan, a democracy, and China’s communist government. To say it could be an ugly situation for Asian markets is an understatement.
More films: Asia is realizing the role of movies in attracting more tourists. Japan, for example, is now the subject of no less than three, globally successful films: “The Last Samurai,” “Lost in Translation” and “Kill Bill: Vol. 1.” Officials in Tokyo, and elsewhere in Asia, are mulling how to exploit movies to boost interest in Asia. It is a campaign that would take its cue from New Zealand. The wild success of the “Lord of the Rings” trilogy, which was filmed in New Zealand, has given that country’s economy a notable lift. Wellington has stepped up efforts to use film as a tool of economic stimulus and other Asian governments are wisely following suit.
Happiness in Indonesia: Political stability brought investors back in droves to Jakarta’s stock market - it’s up by about two-thirds in dollar terms this year. Yet poverty rates and inadequate education funding raise concerns about the future of the country, which has the world’s largest Muslim population and which sits on the front lines of Asia’s war against terrorism.
More sports stars: Lacking in globally known leaders, many Asians have settled for athletes as their cultural representatives abroad. Such standouts as Yao Ming of China, who plays basketball for the Houston Rockets, and Hideki Matsui of Japan, an outfielder with the New York Yankees, have brought global attention to Asia. And, perhaps, the region’s economies, too.
A saner Pyongyang: The past year was a banner one for bizarre actions and statements from North Korea’s mysterious leader, Kim Jong Il. Let’s just say that South Korea, and the rest of Asia, could do with less of his antics in 2004.
Chinese magic: Some Asians can be excused for watching the region’s economic rise without feeling part of the magic. For all the institutional money flowing into markets, just about all of the longer-term foreign direct investment is going to China. The rest of Asia wants its share in 2004. Good luck, guys - you’ll need it. Posted on: 2004-01-02 03:36
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