Pesek on Asia: Shadow-Banking Monster
Good morning. Here's my take on some of the stories driving the debate in politics, finance and social issues across Asia today:
China's shadow-banking monster is still on the loose.
The grand experiment with clamping down on credit is now on the backburner. Premier Li Keqiang's big talk about reining in excesses is belied by a near doubling China's broadest measure of new credit in August. Policing the shadow-banking industry is the key to avoiding a Japan-like debt crisis. Aggregate financing jumping $257 billion last month shows Li is putting his 7.5 percent growth target ahead of overhauling the bubble-plagued economy. China has created a monster in its sprawling shadow-banking sector. Sadly, it's still very much on the loose.
Toyota, Honda hurting from Japan-China tensions.
A year after giant anti-Japanese protests around China, geopolitical tensions are weighing on automakers. While sales have bounced back to some extent, analysts worry the ground lost by Toyota, Honda and Nissan won't soon be made up, if ever. Anger over Japan's September 2012 purchase of an island chain claimed by both nations has Chinese buying Volkswagens and Fords instead. It's a reminder that mending fences with China and South Korea should be a central part of Prime Minister Shinzo Abe's drive to revitalize the economy. Really, what good is a weaker yen if two of your main customers boycott your goods?
Singapore's Lee sees no 1997 replay for Asia.
Anyone looking at Indonesia, India and Thailand and fearing another Asian crisis can relax. Or so says Prime Minister Lee Hsien Loong of Singapore. "On balance I would take a sanguine view," Lee said at a business conference. While challenges differ from country to country, Lee added, "I would say we are in a safe position. I don't see this being a new global crisis or regional crisis." Lee would know better than many of his peers, given how open Singapore's economy is to the whims of global trade and capital.
Thai Airways can't whitewash Bangkok accident.
If the Richard Nixon/Watergate era taught political and business leaders anything, it's that the coverup can do more damage than an event or deed. Thai Airways clearly didn't take those lessons to heart following a Sept. 9 accident that saw one of its Airbus planes skid off a Bangkok runway and injure 13 passengers. The airline could be correct in its claims that defective landing gear was to blame, but that point is lost in the brouhaha over covering its logo and the serial number on the damaged aircraft with paint. That made it look as though one of Asia's premier airlines had something to hide. When it comes to reputational maintenance, transparency is always the best way to fly.
India considers a "Rajan Effect" in markets.
Dollar borrowing costs fell from one-year highs this week, a sign markets like new central bank Governor Raghuram Rajan’s plan to strengthen the financial industry. It's boosting confidence in local lenders and fueling hopes that the rupee's plunge to all-time lows may be slowing. Too soon to buzz about a "Rajan Effect" in Asia's third-biggest economy? Perhaps, but there is no doubting that Rajan has had a promising start.
(William Pesek is a Bloomberg View columnist. Follow him on Twitter.)