How an American Recession Might Hit Asia?

Investors in Asian stockmarkets were until recently big fans of the "decoupling" theory: the notion that Asian economies can shrug off an American recession. This week's plunge in shares, taking the MSCI Emerging Asia Index down by 25% at one point from its October high, suggests they have changed their minds. But the fact that Asian markets have not decoupled does not necessarily mean that their economies will follow America's over a cliff.

Decoupling was always a misnomer, seeming to imply that an American recession would have no impact on Asia. In fact exports and hence profits would certainly be reduced. The pertinent argument is that they would be hurt by much less than in previous American downturns. As well as hitting exports, America's troubles could affect Asia through various financial channels. Asia's exposure to the subprime mess is thought to be much smaller than that of American or European banks. Even so, Chinese bank shares tumbled this week on rumours that they would have to make much bigger write-downs on their holdings of American subprime securities. And if stockmarkets slide further as global investors flee from risky assets, this could dampen business and consumer confidence in the region.

Some Asian economies are more vulnerable than others: Singapore, Hong Kong and Malaysia have exports to America equivalent to 20% or more of their GDPs, compared with only 8% in China and 2% in India. There are already some ominous signs. Singapore's exports to America are down by 11% over the past year, while Malaysia's fell by 16%. Exports to other emerging economies and to the European Union surged, so total exports still grew by 6% in both economies. But that was much slower than at the start of the year, and the worry now is that demand from Europe has started to flag. The growth in China's exports to America slowed to only 1% (in yuan terms) in the year to December from over 20% in late 2006. So far the impact on GDP growth has been modest. Figures on China's fourth-quarter GDP were published on Thursday January 24th and showed growth above 11%.

China's economy would probably still expand by around 8-9% even if export growth dried up. During the 2001 American recession China's GDP barely slowed. In contrast, Hong Kong, Singapore, Taiwan and Malaysia suffered full-blown recessions. America's recession this time is likely to be deeper than in 2001 and Asia is now more integrated into the global economy. Doomsters conclude, therefore, that these economies could be hit harder this time. The main reason to be more optimistic is that domestic demand (consumer spending and investment) is likely to remain strong and governments have more flexibility. Last year, despite a slowdown in America's imports, most Asian economies grew faster as domestic demand speeded up. Robert Prior-Wandesforde, an economist at HSBC, says that those who argue that Asian economies cannot decouple from America are ignoring the fact that they already have. Take Malaysia: exports to America plunged, yet its GDP growth quickened from 5.7% at the end of 2006 to 6.7% in the third quarter of last year.

Contrary to the popular view that Asia's meltdown in 2001 was entirely due to a slump in exports, Peter Redward, at Barclays Capital, argues that a fall in investment played a bigger role. Firms had too much debt and excess capacity, particularly in the electronics sector, which was at the heart of the American recession. Today firms are in much better shape. Capacity utilisation is high across the region; outside China investment as a share of GDP is low by historical standards; corporate balance-sheets are stronger and real interest-rates are low. Firms are therefore much less likely to slash investment than in 2001. Macroeconomic fundamentals are also much healthier in East Asia. Large foreign-exchange reserves make countries less vulnerable to foreign shocks. Budgets are in surplus or close to balance, giving policymakers more room for a fiscal stimulus to support growth.

Thus even if Asia's exports clearly have not decoupled from America, its economies will be hurt less than in the past. Standard Chartered forecasts that emerging Asia will grow by an average of 6.4% in 2008, down from 7.8% in 2007. In 2001 growth dropped by three percentage points to 4.2%. Financial markets were slow to realise that Asian growth and hence the profits of some companies would be dented by an American downturn. But now they risk exaggerating the damage. Economic decoupling is not a myth.
Tags: Economics, American Recession, Asian Stockmarkets, Subprime Securities, Economic Decoupling

Looking for Landed Property

Anyone knows of anyone who wanted to sell their house? Am looking for one at the moment and hopefully it meets the following criteria:-

Land size: 22 x 80 to 22 x 100
Built up area: 2500 square feet onwards
Renovations: Kitchen and upper floor's rooms are fully extended. Best if front portion has been extended too
Location: Sri Petaling and Happy Garden area (not used to other areas lah)
Condition: Hopefully could move in with minimum renovations and the house has not been built for umpteenth years

Have to resort to this search as the last few houses that I have viewed were not up to what I wanted. Following issues that were not favourable:-
* If the built up area was there, the price was way too exhorbitant.
* The house looks good but toilets were too small.
* Price was quiet alright but the location was not suitable.
* House was alright but in order to take that house, extensive renovation has to be done.
* Price alright, house looks just nice, renovations were up to mark but the empty land in front of the house was a surau (muslim prayer hall) reserved land. Not that I'm racist but you wouldn't want that sort of traffic right in front of your house, day in day out.
* House at suitable location with low price but would require extensive renovations from bottom

Thought it was easy to buy a landed property. Some real estate agents are helping me out.
Tags: Landed Property, Real Estate, Sri Petaling, Happy Garden

Hunting Around Mid Valley

Was at Mid Valley the other day, hunting for some stuff for niece's wedding. When it comes to food, it must be sufficient. Now let's see, which one has not been frequented for long long time. American Chili's it is.

Ordered the sizzling chicken fajita that came with three pieces of tortilla. It was good and took the bottomless Milo drink. Got a cup that was filled with ice and there you are - Iced Milo (two cups of it).
As for dessert, oh wow, the Chocolate Molten cake. A warm chocolate cake with chocolate fudge and an vanilla flavoured ice-cream to top it off.
Now this is the finished work of the air-conditioned bridge connecting the Mid Valley and Gardens. Back in September 2007, this place was totally different.
After getting what I wanted, went straight home and took a peep at my letterbox. Not surprised to see that our letterboxes being spammed.
Tags: The Gardens, Mid Valley, American Chili's, Spam, Chicken Fajita, Chocolate Molten Cake

Who Should Do What First?

You really have to read this report:-

Thieves leave area with no electricity
WE refer to the article under the heading 'Dream homes turn into nightmare' which appeared in StarMetro on Dec 27, 2007.

Tenaga Nasional Berhad (TNB) would like to inform homeowners that the electricity supply to the housing area could not be supplied because TNB gadgets and cables in the area were stolen.
These items were stolen because there was no security at the area.

To prevent the theft from happening again, TNB, after holding discussions with the local council and residents committee, agreed that electricity supply would be connected only when residents move into their homes.

Based on the information provided by a representative of the residents committee last month, the owners have yet to move into their homes.

We urge TNB customers to call or SMS their complaints to 15454 should they encounter any problems with our service.

HUSSIN OTHMAN
General Manager
TNB Selangor (Distribution Division)

Found the above statement by TNB Selangor appalling. How are the residents going to move in when electricity is not connected? But on the other hand, if TNB was to re-connect the housing area and residents delayed their moves, the thieves would ransack the whole area again.

This is really another chicken and egg situation. In this case, who should do what first? Pity the homeowners in the first place as some could be financially strapped due to payment for two houses at the same time (be it housing loans or rentals).
Tags: Chicken and Egg, Tenaga Nasional Berhad, TNB, Electricity Supply

Football Bookies in Asia

When it comes to a major football tournament, I would get to see many people putting bets on matches being played on that night or nights to come. Heard of friends' offices that organised betting pools for a particular match or bet on tournament winner only.

During those same period, I have seen football bookies sitting in restaurants accepting bets via phone calls openly. Curiously, I did ask them what was the bet like for that match that we were watching. Many ways of betting quoted by him. Didn't place any though but he did ask me "want to bet or not?" ........... haha. Friendly guy anyway, maybe need to as to maintain good public relation.

The Interpol are getting ready for the coming Euro 2008 that would be held during June/July 2008 and the crackdown on football bookies were discussed in their Global Conference on Asian Organised Crime in Singapore recently. "Football bookies, here we come" - that could be Interpol's theme for 2008.

Wondering whether Interpol was involved in the on-going African Nations Cup? Benin's coach, Reinhard Fabisch, has publicly announced that he was approached by an African representative on behalf of a Singapore based syndicate. Later, his team lost 1-0 to Mali. Were his players on the take?

Have you placed any bets for the African Nations Cup? With Euro 2008 coming, I'm sure many one-off gamblers who are football fans would be placing tons of monies. As for me, would be grabbing lots of titbits in anticipation of those late night matches and maybe pop in lots of vitamin B.

It was such menace that made me lost interest in Malaysian football. Since the massive crackdown in the 1990s on dozens of players in the main local league, I have gave up hope on Malaysian football. With the pathetic display by the Malaysian football team in international matches, I found it hard to even read about it.

Somehow, Asian bookies tend to be at the forefront when major football tournaments are being organised.

Reading: Interpol cracks down on football betting - Stars
Tags: Football Bookies, Match Fixing, Interpol, Asian, Asian Bookies, Bookies, Bets, Gambling, Betting, Betting Syndicates, Football Betting, Football Gambling, Football, Soccer, Euro 2008, African Nations Cup, Malaysian Football, Reinhard Fabisch

Punishment on Lazy Staff

Upon seeing this picture (in Funny Malaysia), I could actually recognise which staff was that (if you were a regular customer at this supermarket). What a way to punish a foreigner. Just because he is foreigner, the owner or supervisor thought it was alright to bully. Yeah, I called it bully because they wouldn't dare to retaliate as he was in a foreign land and don't know what to do.

Well, the notice did state "I was lazy". Maybe he was really lazy but still, he doesn't deserve such a punishment in this civilised country. Can you imagine an adult being punished like this? Really disgraceful.

Different people or organisation have different ways of punishing their staff.

Which supermarket? Sri Kota Supermarket located at Taman Danau Desa.
Tags: Sri Kota Supermarket, Taman Danau Desa, Punishment, Lazy Staff

Capsule Speakers

This mini capsule speaker, called X-mini, found in Singapore is a small gadget which could be hooked onto your laptop/pc produced by XMI Pte Ltd.

Would be fun to test its power.











It will be released by end Feb 2008. Looks very cute and saves space too.No price indication yet.

Somehow Singapore is producing excellent multimedia peripherals for laptop/pc market with Creative Technology Ltd leading the pack.

Reading: Double the goodness with X-mini Capsule Speaker Gen2 - Asia CNET
Tags: Mini Capsule, Speakers, Multimedia, X-Mini, XMI Pte Ltd, Singapore, Creative Technology Ltd