In today’s briefing:
- Emerging Asia – Moving Ahead Despite The Headwinds
- Singapore: The Next Generation Leadership Sets Out to Make Its Mark
- Japan: The Winner from This Year’s Spurt of Inflation
Emerging Asia – Moving Ahead Despite The Headwinds
- First, our baseline view is that the US will avoid a recession and that capital spending there – which has a strong influence on Asian exports – can grow.
- Second, we see China recovering in 2023 and adding to Asian export demand. Third, commodity prices are likely to continue supporting several Asian economies.
- Finally, there are structural forces which will help promote investment into Asia – supply chain reconfiguration, reforms that improve the appeal to investors and infrastructure spending.
Singapore: The Next Generation Leadership Sets Out to Make Its Mark
- The launch of the “Forward Singapore” exercise provides an opportunity for Deputy Prime Minster Lawrence Wong, the anointed successor to Prime Minister Lee to raise his profile.
- The policy priorities of the next generation of leaders can be gleaned from the exercise and it reinforces DPM Wong’s leadership style of consensus building.
- A significant departure in the policy priorities of the next administration is highly unlikely, however.
Japan: The Winner from This Year’s Spurt of Inflation
- Given public debt of 248% of GDP, inflation (however generated) is a solid net positive for Japan, boosting government revenue and reducing the fiscal deficit & public debt/GDP ratios.
- The depreciated Yen (at a 14-year low at end-June) is a boon for exports and import-competing manufacturers. Despite Kuroda’s jawboning, the Yen is likely to stay weak, boosting Japan’s manufacturers.
- The equity market is trading at 14.1x, far below its 10-year mean PE of 21.3x. The dominance of exporters should bolster index earnings. Japan will be a winning equity bet.
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