The Asian financial sector has excellent prospects due to favourable demographics, high savings, propelling growth and access to technology and capital. Tan Sri Andrew Sheng, Fung Global Institute president said at the inaugural CIMB Asean Conference yesterday that the current financial crisis has triggered a fundamental review of the international financial order and architecture. Post crisis, advanced countries would see slower growth while emerging markets, especially Asian, are expected to grow strongly, he said. The Asian Development Bank (ADB) has projected an 'Asian Century' scenario where Asia's share of global GDP could double by 51% by 2050, returning the world economic order to what it was before the Industrial Revolution some 250 years ago. By 2050, estimates are that Asia will have half of global financial assets with major financial centres located in Asia. By then, at least three Asian currencies will be global, the Yen, Rmb and Rupee, he added. This prospect has raised the issue of whether Asia can 'go it alone' by 'decoupling'. “In the short term it is not possible but it can be done in the long term provided we integrate and develop our internal capacity," he said. The prospect for decoupling depends on several important factors such as generating domestic engines of consumption and growth, creating own thought leadership, upgrading regional governance and institutionalisation as well as further economic and financial integration. (Bernama)
Should Asia face another financial crisis, chances are it will be more prepared to deal with it than during the 1997/98 Asian economic meltdown, Asean corporate leaders said at the inaugural CIMB Asean Conference yesterday. They, however, added that no country was completely immune to shocks or turbulence, and preparedness for any crisis came from lots of effort and hard work. Khazanah Nasional managing director Tan Sri Azman Mokhtar said if it was not for the 1997/98 Asian crisis, the region would have been worse off in the 2008 global financial meltdown. However, when it came to volatility and instability, the two negative elements were still lingering and Asian countries must not stop working on the best ways to cushion any impact that might arise from yet another crisis, he said. Former Philippine secretary of finance Jose Isidro Camacho said the 1997/98 crisis had resulted in a stronger Asia when it was hit by the 2008 crisis but it did not totally decouple the region from the West. Indonesian Arwin Rasyid, who is CIMB Niaga CEO, said if there was one thing his country learned from the Asian crisis 13 years ago, it was governance. (BT)
The International Trade and Industry Ministry (Miti) welcomes Malaysian companies affected by the massive floods in Thailand to come back, its secretary-general Datuk Dr Rebecca Fatima Sta Maria said. "But keeping in mind the fact that we're still on track to woo high value-added investments to Malaysia," she said. Minister of Miti Datuk Seri Mustapa Mohamed had said about 10 Malaysian companies were affected by severe flooding in Thailand. (Bernama)
Malaysia signed US$10bn economic cooperation deals with China during the roundtable dialogue between PM Datuk Seri Najib Tun Razak and selected Chinese corporate leaders in at the just-concluded 8th China-ASEAN Expo (CAEXPO). Najib also witnessed the signing of memoranda of understanding or agreements between Malaysian and Chinese enterprises. They included engineering, procurement and construction contracts between KLS Energy Sdn Bhd and China Machinery Engineering Corp for the wind/solar hybrid power project in Jaffna (Sri Lanka) and JAKS Resources Bhd and China National Technical Import and Export Corp for thermal power plant project in Vietnam. Others included Perak Transit (The Combined Bus Services Sdn Bhd) and Xiamen King Long United Automative Industry Co Ltd as well as between Proton Marketing Sdn Bhd and Hawtai Motor Group. (Bernama)
The agreement among European leaders to expand a bailout fund to solve the region's debt crisis, creates the right momentum and background for other nations to take action, Minister in the Prime Minister's Department, Tan Sri Nor Mohamed Yakcop said. "Beyond the size of the fund, what is important is the signal that we get from Europe," he said. Under the package, agreed to early yesterday morning, European private banks holding Greek debt, will accept a loss of 50% and banks must also raise more capital to protect themselves against losses resulting from any future government defaults. The main bailout fund will also be boosted to €1tr. (Bernama)
US gross domestic product rose at a 2.5% annual rate in 3Q (+1.3% in 2Q), Commerce Department figures showed. The reading matched economists’ expectations. (Bloomberg)
US household purchases increased at a 2.4% pace in 3Q (+0.7% in 2Q). Economists projected a 1.9% increase. Purchases added 1.7%pts to economic growth. (Bloomberg)
US initial claims for state unemployment benefits slipped by 2,000 to a seasonally adjusted 402,000 in the week ended 27 Oct (403,000 in the prior week), the Labor Department said. Economists forecast claims edging down to 400,000. The number of people still receiving benefits under regular state programs after an initial week of aid dropped 96,000 to 3.645m in the week ended 15 Oct. Economists had forecast so-called continuing claims at 3.7m. (Reuters)
US pending home sales declined 4.6% in Sep (-1.2% in Aug), the biggest since Apr, the National Association of Realtors said. Economists forecast a 0.4% gain. (Bloomberg)
Eurozone economic sentiment eased to 94.8 in Oct (95.0 in Sep). Economists expected a reading of 93.7. (Reuters)
Eurozone industry sentiment fell to -6.6 in Oct from -5.9 in Sep, in line with economists projection of a -6.5 reading. (Reuters, Bloomberg)
Eurozone consumer confidence dropped to -19.9 in Oct from -19.1 in the prior month. (Reuters, Bloomberg)
Eurozone services sector sentiment improved to 0.2 in Oct from 0.0 in Sep. Expectations were for a drop to -1.3. (Reuters, Bloomberg)
Japanese retail sales fell 1.2% yoy in Sep (-2.6% in Aug), suggesting the global economic slowdown and a strong yen dented consumer appetite for spending. The market forecast a 0.1% annual decline. (Reuters)
Bank of Japan governor Masaaki Shirakawa and his policy board expanded their credit and asset-purchase programs to a total of ¥55tr (US$724bn) from ¥50tr in an 8 to 1 vote, the central bank said in a statement. It also kept the overnight lending rate between zero and 0.1%. (Bloomberg)
South Korea’s gross domestic product expanded 0.7% qoq in 3Q (+0.9% in 2Q), the central bank said. Economists expected a reading of 0.6%. (Bloomberg)
China could be willing to contribute between US$50bn and US$100bn to the eurozone’s bail-out fund but the scope of its involvement will depend on European leaders satisfying key conditions, according to two senior advisers to the Chinese government. (Financial Times).
Thailand’s government said it is losing the battle to protect Bangkok from rising floodwaters. “The flooding is beyond our control now,” said Pracha Promnog, who heads the government’s flood relief operations. “The main wave of water hasn’t arrived in Bangkok yet.” (Bloomberg)
Food inflation in India, based on the wholesale-price index, accelerated 11% yoy, unchanged from the previous week. Prices rose 0.25% wow as vegetables and fruits became more expensive. (Wall Street Journal)
Singapore's growth will stall over the next few quarters before seeing a modest recovery late into 2012, the Monetary Authority of Singapore said on Thursday, raising the possibility that Singapore could only grow below its potential growth rate of 3 and 5%. (ST)
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