The entire country is basking in warmer-than-normal temperatures.
This year, winter was nearly absent almost everywhere in country. The warm weather has brought everyone in the neighborhood out.
As the spirits are soaring, I sense that, as a global economy, we are turning a corner.
I see the signs of growth and optimism everywhere. Granted, some of the growth is being helped by government-stimulated rate cuts, but we should now embrace growth where we find it and help restart growth in our investment portfolios.
With the Greece and European Union crisis now taking a slight back seat, the attention has focused on the U.S. nonfarm payroll and retail sales data.
Both have shown some good results and have continued to climb higher.
Pop Quiz: If Europe isn't crashing and the United States is gradually growing, who will benefit from rapid growth? Answer: Asia.
As we have seen over the past years, when we have decent or reasonable growth in the West (Europe, United Kingdom, United States, Australia, etc.) we see the Asian economies turn red hot. My feeling is that we are going to see that growth ramp up real soon all over Asia. The signs are already apparent.
In India, where we have seen the Reserve Bank of India (RBI) lack the proactive approach, we notice a twist this time. With the Advance Tax (corporations have to pay annual estimated taxes in quarterly advances) payment deadlines approaching and the economy showing softness, the RBI decided to cut rates in a surprise move. This was done to ensure that sufficient liquidity is maintained in the cash system and businesses continue to flourish. Nice move, RBI!
Elsewhere, in Philippines, we see another positive surprise. Philippine exports surprised us by rising 3.0 percent year-over-year (yoy) (-18.9 percent in December) after eight successive months of declines. This was well above consensus. This represents about a 19 percent month-over-month (mom) increase in exports after a 9 percent rise in December. This is by far the largest increase in exports over a two-month period in the 33 years of data available.
Importantly, electronics exports led the way, rising 0.4 percent yoy after having been down 29.4 percent yoy in December. This is significant because the Philippines’ electronics exports are mostly components – largely semiconductors – rather than finished products. As such, export growth in the Philippines tends to lead export growth for the rest of the region by a month. To see them surging so strongly sends a very positive signal for the region.
China has announced that its weak growth of 7.5 percent for the recent fiscal year is about as low as it will see. The global expectation is about 8.5 percent for next year or higher. With an incoming new government, we will see a serious intent (and policy measures) to ensure that such targets are met.
I am seeing signs of revival in Vietnam and Cambodia as well. All in all, Asia (Japan) seems to be ending its winter sleep and awakening.
Let’s watch it just a tad bit more to ensure that this is sustained and then dive in with strategic investments throughout Asia to bolster our portfolio.
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