S&P: Asia’s Unfinished Homework: Rebalancing Growth To Make It Sustainable

May 17, 2013 Leave a comment

Asia has unfinished homework: S&P

The Nation May 17, 2013 1:00 am

Although Asia’s trade and current account surpluses have declined recently, the evidence is mixed on whether the indicators have improved for the right reason, according to Standard & Poor’s Ratings Services. In its report on “Asia’s Unfinished Homework: Rebalancing Growth To Make It Sustainable,” S&P said the region has been accused of having “mercantilist tendencies” for its role in the unhealthy global imbalances. Paul Gruenwald, chief economist for Asia-Pacific, said China often gets the lion’s share of the blame for Asia’s surpluses. “When the indicators in Asia are scaled by GDP, we see that size matters,” he said. “It’s easier for a small economy to run a large surplus or deficit, and the ‘big guys’ don’t look so dominant when we scale the data. “If we scale China’s current account and foreign currency reserves by GDP, the country doesn’t appear so uniquely guilty of generating the types of macroeconomic outcomes typically associated with the conventional wisdom about Asia’s contribution to global imbalances,” he said. Asia’s unfinished homework is to rebalance to a more consumption-driven economic model. “Note that it isn’t about simply consuming more. Consumption has been trending higher in all the economies in our sample. The key is for private consumption to grow faster than GDP. Only then will the consumption-to-GDP ratio rise,” he said.

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Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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