Pesek on Asia: Good Economic News
Good morning. Here's my take on some of the stories driving the debate in politics, finance and social issues across Asia today:
Good economic news
Rumors of Asia's economic demise were greatly exaggerated. New data on China, South Korea and elsewhere in the region should put to rest speculation about another 1997-like meltdown. China’s manufacturing Purchasing Managers’ Index rose to an 18-month high, while the International Monetary Fund sees Korea growing a healthy 3.7 percent in 2014. That's not to say Asia is risk-free as the Federal Reserve mulls withdrawing liquidity from markets. But its resilience in the face of mounting global challenges should silence the bears for the time being.
New property bubbles?
Chief among the risks facing Asia is that hot money creates new asset bubbles, particularly in property markets. Here's a timely Reuters analysis on potential house-price-inflation surges from China to Canada to U.K cities including London. "We're stoking up a huge bubble," it quotes Andrew Oswald of Warwick University in Britain as warning. "It's quite extraordinary. We virtually ruined the Western world by having high house price inflation and now we're determined to do it again." Buckle your seatbelts!
Thais couldn't kill bill
This week's protest in Bangkok, 20,000 people strong by some estimates, is just the beginning. It wasn't enough to stop the lower house of parliament from passing a bill to provide amnesty to people convicted of crimes linked to political clashes since the nation’s 2006 coup, increasing the odds former leader Thaksin Shinawatra will soon return. A fresh period of political chaos could cost Southeast Asia's second-largest economy and its markets hard-won gains. An event-rich economy in the best of times, Thailand is about to shake Asia anew.
China's pollution challenge
The Communist Party's latest challenge: tourists. Not an infestation of visitors to Beijing, but a dearth of travelers keen on seeing Tiananmen Square, the Forbidden City and the Great Wall. Thanks to the city's smoggy skies, arrivals declined by roughly 50 percent in the first three quarters of the year compared to a year earlier. China must exponentially reduce its reliance on exports and cap pollution, and now. Otherwise, its 1.3 billion people will choke on their economic success.
Sony flames out yet again
Those who rejoiced over the selection of Kazuo Hirai last year to run the one-time game-changing company are having some serious buyer's remorse as its stock heads for the biggest drop in five years. Rather than shake things up and relocate Sony's innovative spirit, Hirai unwisely doubled down on Sony's tired TV and smartphone businesses. As Apple and Samsung steal more and more of Sony's once-unbeatable franchise, Hirai is proving right those skeptics who felt he was a poor choice to run the troubled behemoth.
(William Pesek is a Bloomberg View columnist. Follow him on Twitter.)