Pesek on Asia: Thailand Taper
Good morning. Here's my take on some of the stories driving the debate in politics, finance and social issues across Asia today:
Blame stocks for China's housing bubble.
China has yet another reason to build a transparent and trustworthy stock market: to tame its property bubble. That's the gist of a timely Bloomberg News piece out of Shanghai today. Turns out, young Chinese have even less interest in equities than many observers thought. Their preference for bricks-and-mortar investments mean China's housing bubble may get even bigger as the economy slows in the years ahead. The value of China's urban residential property market was nearly $19 trillion at the end of 2012, Standard Chartered estimates. That dwarfs the nearly $3.8 trillion in the stock market and serves as a reminder that China's real-estate craze remains alive and well even as the government pledges to tame it.
Thailand says it's ready for Fed tapering.
Few markets reacted with more glee than Bangkok's over Lawrence Summers's decision to step aside from the race to become the next Fed chairman. Just as it was in 1997, Thailand is at the epicenter of worries that Asia could tip into another crisis when Federal Reserve begins draining liquidity. News of Summers's withdrawal cheered Thailand investors, who worried the outspoken economist would be more hawkish than new frontrunner Janet Yellen. Adding to the euphoria was a Bank of Thailand report today claiming that the Thai economy is ready to weather the end of the Fed's quantitative-easing experiment.We'll see: Thailand has fallen prey to hubris before.
In India, it'll be Modi against Manmohan Singh's Congress party in 2014.
The “Gujarat model” is about to have its day in the second-most populous nation. The opposition Bharatiya Janata Party chose controversial Hindu nationalist Narendra Modi to as its official candidate for prime minister in next year's election. Modi's baggage -- including his alleged role in 2002 riots that killed about 1,000 Muslims -- is being trumped by the higher-than-average growth rates he has generated in the western state of Gujarat since 2001. With India's $1.8 trillion economy expanding at the slowest pace in a decade and the rupee plunging, voters may indeed be willing to take a chance on a man with a past to enjoy a brighter future.
Is the Trans-Pacific Partnership a U.S. trade grab?
This question is being posed by none other than Clyde Prestowitz, who once led U.S. trade negotiations with Japan and is now president of the Economic Strategy Institute in Washington. Asian policy makers from Seoul to Kuala Lumpur have long worried that free-trade deals with the U.S. were about maximizing benefits for the leaders of Fortune 500 companies at the expense of Asia's poor and middle class. The U.S.-led TPP movement may be no exception, says Prestowitz, who warns that the business interests driving the deal are set to exact their pound of flesh. No wonder Japanese Prime Minister Shinzo Abe faces an uphill battle to convince his ruling Liberal Democratic Party to join.
Japanese banks regain some of their mojo.
Quietly but steadily, Japanese banks are recapturing some of their former glory as they grab the top position as overseas lenders. At the end of March, Japan had 13 percent of the cross-border lending market, according to the Bank for International Settlements. While that's a far cry from Japan's roughly 40 percent share in the late 1980s, it marks a big shift in focus among bank executives. A sluggish economy and aging population have Japanese bankers looking abroad for growth. Also, Japan is offering more and more financing to developing economies from Brazil to Russia to Southeast Asia. Whatever the reason, signs of life among Japanese banks are good news for a global economy in search of growth engines.
(William Pesek is a Bloomberg View columnist. Follow him on Twitter.)