Deputy Chief Economist

Sharmila Whelan

Independent and original Asian investment research

Aletheia Capital

Aletheia Capital (HK) Ltd. (previously known as Asianomics) combines the extensive knowledge of its experienced team with technology and regulatory changes to disrupt Global Markets business in Asia. The firm is completely independent with no conflicts of interest either on Investment Banking advisory or Capital Markets execution.

Macroeconomics

<p><strong>That capex rebounded last year is an understatement – investment’s contribution to real GDP in 2017 was the biggest since 1998. Moderation was inevitable. Add to this the new US export quotas, soft manufacturing activity and involuntary stock builds and the implication is that companies are set to slow the pace of investment spending further over the next few quarters. Having said that profits are still climbing implying that the investment cycle is set to pause rather than go into reverse. We are guardedly optimistic. Monetary and fiscal policy remain growth supportive. Budgetary spending is rising. We expect policy rates to increase by no more than another 25bp in 2018. We are underweight Korean equities but this purely because we are overweight Japan in our regional equity portfolio. Korean equities should still perform well this year.</strong></p>

That capex rebounded last year is an understatement – investment’s contribution to real GDP in 2017 was the biggest since 1998. Moderation was inevitable. Add to this the new US export quotas, soft manufacturing activity and involuntary stock builds and the implication is that companies are set to slow the pace of investment spending further over the next few quarters. Having said that profits are still climbing implying that the investment cycle is set to pause rather than go into reverse. We are guardedly optimistic. Monetary and fiscal policy remain growth supportive. Budgetary spending is rising. We expect policy rates to increase by no more than another 25bp in 2018. We are underweight Korean equities but this purely because we are overweight Japan in our regional equity portfolio. Korean equities should still perform well this year.

Korea - Capex In For A Period Of Adjustment