Everyone knows that there’s a bad moon rising over Asia right now; China is in the doldrums, so is Singapore, not to mention Hong Kong, Korea, and Japan. Unfortunately for most, much like the epic Creedence song, there seems to be more trouble on the way. Well, here are five things that you should look out for:
Spooky servicing costs. As previously reported, debt servicing costs for Asia ex-Japan has somehow managed to creep halfway to Asia crisis levels despite the region’s bedrock low interest rates. At the time of reporting, the only problem seemed to be inflation – the only sure-fire way to get the central banks to start hiking. Well, rates are currently reaching new highs thanks to the current bond selloff. While there are several ways to mitigate that, if happens to remain sustained…
Foiled reforms. While Shinzo Abe’s efforts on opening corporate Japan to the outside world shows no signs of abating, Beijing’s initiative to switch to a more market-led economy seems to have hit so many roadblocks lately that even Central Huijin’s deputy chair has written about it on state media.
Image problems. Thanks to their omnishambolic attempts to rescue the stock market, Beijing is currently facing a huge credibility crisis. Are they really going to reform the economy? Are they insisting on pulling the strings? While they’ve ultimately decided to make like a Princess Elsa and let go of the SHCOMP, their previous attempts have already left a mark on their face and there’s no telling what they’d do to make up for it.
Crippled exports. Yeah, this is a given. With one of the world’s importers currently in doldrums, imports to the nation should definitely take a hit. What’s on deathwatch though are Taiwan’s and Korea’s dependence on China for a huge chunk of its GDP. The Financial Times recently posted which countries are the most exposed to China at the moment and while Australia took the top spot, its exports to the nation – much like New Zealand’s – are generally consumed there, unlike Taiwan’s electronics which usually end up resold somewhere else.
Photo: TranceMist