new economy

　　

For many years, Singapore has been the vane of world trade. Therefore, it was encouraging news when Singapore achieved economic growth last month due to increased exports of electronic products (especially to neighboring Asian countries).

    The city-state of Singapore is not alone. South Korea also performed well in December last year, with exports increasing by 6.4%. Exports from Asia (excluding Japan and China) increased by 7.3% in November last year. In fact, according to data from Goldman Sachs, most emerging market exports have gradually improved throughout 2016, which reflects not only the rebound in commodity prices.

    The strong end of 2016 for Asian exporting countries has brought some hope that trade-dependent industries such as world trade and shipping may eventually reverse the decline in volume and value over the years.

    However, the appearance of these beautiful export data comes at a time when many investors are worried that the possible trade protectionism in the United States and the tit-for-tat retaliation from Donald Trump's anger objects will become the largest market in Asia in the Chinese Lunar New Year of the Rooster. One of the risks.

    So, are we about to see the bottom of world trade rebound? Still, these signs of recovery may be annihilated under the impact of trade protectionism-as President Trump tears up multilateral trade agreements from the Trans-Pacific Partnership (TPP) and replaces them with bilateral agreements. Many economists believe that any signs of recovery in the trade sector may remain fragile.

    There are good reasons to believe that companies and markets that rely on global economic cycles (such as Singapore, South Korea, and Taiwan) will be disappointed. In fact, the suggestion of the speakers at the Financial Times Asia Investor Outlook Conference held in Singapore was to buy markets that are not closely related to the fate of the global economy.

    Today, President Trump is pressing domestic and foreign automakers to produce cars in the United States, but in a few years, car sales will plummet, because more and more consumers (especially in big cities) will be more Favor the convenience of Uber or Didi Chuxing instead of owning a car and bearing all the extra costs involved.

    This is not to say that investing in Asian economies that rely more on domestic demand is a risk-free strategy.

    Regarding Singapore’s economic performance, Wei Zheng Kit of Citigroup said: “Whether the recent rebound is sustainable is still a question.” “Even if exports and gross domestic product (GDP) performance exceed our expectations, some domestic and Industries that are sensitive to interest rates may not perform well in 2017, because rising debt levels, rising interest rates and continued weakness in the job market are putting pressure on these industries. This is a typical dual economic situation," he added.

    Asian economies with stronger domestic demand also face other disadvantages. The combination of a strong US dollar and the Fed’s possible multiple interest rate hikes this year means that the global funding environment is tightening. If China continues to reduce its holdings of US Treasury bonds and reduce purchases at auctions, it will only increase the upward pressure on interest rates.

    However, with Trump entering the White House, the focus is on Asian economies that rely heavily on exports. For investors, betting that they can withstand the dual pressures of protectionist policies and China's domestic economic transformation seems too optimistic.

The economies of India, Indonesia and Thailand will perform well

    According to a CNBC article, economists told CNBC that when it comes to the development prospects of the Asian economy, South Asia still cannot be ignored. India, Indonesia and Thailand will remain the three best performing countries in Asia in 2017, given the fundamentals of their economic health.

    All these factors from the tightening monetary policy of the United States — the Federal Reserve is expected to raise interest rates three times in 2017 — and the slowing global trade speed are all driving the economic development of these three countries.

    When it comes to the development prospects of the Asian economy, HSBC is cautious and warned that in 2017 the economic profit growth rate in the region will slow, rather than accelerate, but India, Indonesia and Thailand will still be a bright spot.

    Kelvin Tay, chief investment officer of UBS Asia Pacific Southern Region, pointed out that last year, Thailand’s benchmark group index was the second best performing index in Asia, rising 20%, mainly due to the rebound in oil prices and 35%. All of the stocks put leverage on oil.

    Neumann stated that in 2013, the currencies of India and Indonesia, which were affected by the U.S. central bank's first interest rate hike, suffered sharp volatility, and now the currency values of these two countries are relatively stable, even if the Federal Reserve implements tightening monetary policy again. . The currencies of India and Indonesia will not stage the tragedy of 2013 again this year.

    Tax reforms in these two countries are favored by more investors. In July last year, Indonesian President Joko Widodo launched a special tax plan to strengthen tax supervision. As of December 20, government revenue reached 7.7 billion U.S. dollars. The Indonesian government also intends to increase infrastructure spending. At the same time, India The government's directive to ban the circulation of old coins that was implemented in November also aims to increase treasury revenue and promote the development of digital payment methods.

    Wellian Wiranto, an economist at the Overseas Chinese Banking Corporation of Singapore (OCBC), is particularly optimistic about Indonesia, believing that the country is the best performing economy in Southeast Asia. Indonesia's domestic consumption (in terms of external risks) provides a major cushion. Although the financial market is relatively weak, this is conducive to the turbulence caused by the outflow of capital. Policy makers are also obliged to support the currency, and colleagues must prevent large fluctuations in the market.

    According to DBS, Indonesia's investment growth rate as a key indicator of healthy economic growth this year will soar to 5.6% compared to last year's 4.5%.