Pesek on Asia: BRICs in a Crumbling Wall
Good morning. Here's my take on some of the stories driving the debate in politics, finance and social issues across Asia today:
Are the BRICs hitting a wall?
A joke making the rounds in markets these days is that Brazil, Russia, India and China should now be nicknamed the BRICKs, as their prospects suddenly seem to be falling as one. Here in Asia, China is generating 7.5 percent growth, but the Shanghai Composite Index's 4 percent drop so far this year spells trouble ahead. The rupee's plunge to record lows, meanwhile, is emblematic of India's travails. Foreign Policy offers a comprehensive look at where things went wrong and whether the golden age of emerging markets is over. The answer is no, but the failure of the BRICS to use the crises of recent years as opportunities to stabilize and retool economies makes them more vulnerable to the next period of global turbulence. Complacency has its price.
Cult of Jack Ma lost on Hong Kong
It may seem odd that a stock exchange looking to raise its global clout would say no to Jack Ma, the billionaire founder of Chinese e-commerce giant Alibaba. Hong Kong Exchanges & Clearing did just that today. Ma wanted to go with a governance structure that leaves executives in control as opposed to shareholders; Hong Kong rejected Ma's plan, making a stand for transparency. "The benefit of turning away people who ask for favors is that it will maintain standards and attract better quality companies,” David Webb, a former exchange director who founded local governance watchdog Webb-site.com, told Bloomberg News. That Ma may now move toward a U.S. listing is more his loss than Hong Kong's, given that his real investor base is in Asia.
Shinzo Abe finds his feminine side
Abe's Japanese revival plan, dubbed Abenomics, has long needed a Womenomics moment. The latter word was coined by Kathy Matsui of Goldman Sachs, who argues Japan's gross domestic product would be 15 percent bigger if the nation empowered its female masses. So far, Abe's suggestions of greater access to child care and having companies recruit more female board members are more talk than action. It comes as good news, then, that Abe is addressing gender later today in a speech before the U.N. General Assembly. He's also scheduled to meet with female business leaders in New York. With any luck, Abe will return to Tokyo energized to better utilize half of Japan's population.
Fiscal realities catch up with South Korea
Politicians make big promises when running for office, and President Park Geun Hye is no exception. Ahead of her election victory in December, Park pledged expanded social spending on everything from allowances for the elderly to free treatment for four major diseases including cancer and cardiac disorders. Today, Park dropped the news that her promises are running afoul of Korea's economic realities. She is scaling back aid pledged to pensioners in her 2014 budget and delaying plans to eliminate the deficit as the government forecasts the first drop in revenue in four years. Korea is still an economic standout in Asia, but its flexibility to use fiscal spending to deal with future crises is narrowing.
China's ever-expanding island claims
Keeping score on disputes over the tiny islands, atolls and reefs driving Asia apart is becoming more challenging by the day. China is involved in a disproportionate number of them -- much of it really an argument over Beijing's controversial "nine-dash map." First published in the late 1940s, the map extends China’s claims as much as 800 miles from Hainan Island to the equatorial waters off the coast of Borneo. Anyone losing the thread on state of play in Asian waters could do worse than refer to this Council on Foreign Relations report. Although it doesn't conclude that tensions will rise exponentially in the years ahead, that risk is written between the lines in bold type.
(William Pesek is a Bloomberg View columnist. Follow him on Twitter.)