KUCHING: A lot of attention was given on the arrival of China’s President, Hu Jintao to the US this week – with both parties already announcing deals prior to the visit and more to come, during the week. Obviously, the ‘dragon’ has just begun to show its prowess to the ‘eagle’.
ENTER THE DRAGON: Photo shows a dragon-shaped lantern being lit at a temple in Nanjing, China. By having all economic superlatives, China not only appears to be leading the rest of continental Asia but also spearheading exciting movements in smaller markets, particularly in its regional ‘cousin’ Southeast Asia. – Reuters photo
President Hu, in a written comment posted ahead of a state visit to Washington yesterday, openly criticised the Federal Reserve’s recent decision to pump US$600 billion (around RM1,833 billion) into the US economy – a move Hu deemed as ‘weakening the US dollar at the expense of other countries’ exports’.
“Hailed as the most important meeting between China and the US, it will likely set a cooperative tone in the increasingly fractious relations between the two economic giants, especially in spats over trade imbalance and an undervalued renimbi,” observed RAM Holdings Bhd’ group chief economist Dr Yeah Kim Leng in an e-mail response to The Borneo Post yesterday.
The economist stated fur the r tha t c l o s e r cooperation between the two leaders to reduce trade and currency tensions would fur ther boos t investor sentiments across the world markets.
China, the wor ld’ s biggest economic runnerup after the US, last week launched the trading of its yuan via The Bank of China Ltd – the nation’s fourth largest lender by assets – in tandem with its plan to internationalise the trading of its currency.
By having all these economic superlatives, China not only appeared to be leading the rest of continental Asia but also spearheading exciting movements in smaller markets, particularly in its regional ‘cousin’ Southeast Asia.
Citigroup Inc (Citibank) Asia-Pacifi c noted in its report that the region would continue to be a hub of deal activities this year with increasing opportunities in countries under Asean.
On Tuesday, Bursa Malays ia announc e d that it would start crosstrading of shares with its Thai counterpart, Stock Exchange of Thailand (SET) by this year’s end. Bursa Malaysia’s chief executive officer, Yusli Mohamed Yusoff told Bloomberg that the move was part of a plan to make Southeast Asian markets more accessible, at the same time spur trading.
“This will continue to lead the high speed growth in the region, with spillovers to the neighbouring countries,” added Dr Yeah.
Following Thailand would be Singapore and the Philippines. Previously, the local exchange together with its counterparts in Indonesia, Singapore, Thailand and the Philippines signed a preliminary agreement in February 2009 to develop cross-border trading links to trim costs and foster investment.
Total trading volume for these countries, with the addition of Vietnam, was at an average 10.1 billion shares a day over the past six months, translating into a combined market value of US$1.8 trillion – two-third of the Hong Kong’s mammoth US$2.62 trillion market value.
Being the key beneficiary of this spillover effect, Dr Yeah pointed out that the region’s growth momentum would be further spurred by rising domestic consumption and investments in the respective countries.
“The cross trading is a step in the right direction as the Asean members march forward towards the realisation of the Asean Economic Community. Facilitating cross-border access to investment and financing opportunities in member countries will certainly accelerate the pace of regional economic integration.”
The FTSE Bursa Malaysia Kuala Lumpur Composite Index climbed 19 per cent last year, while benchmark gauges in Thailand and Indonesia surged more than 40 per cent and the Philippines by 38 per cent.
Another notable regional exercise was the opening of a stock exchange in Laos – the region’s smallest economy – as the country aspired towards integration with the global economy, as well as enlisting into the World Trade Organisation (WTO).
Starting with the trading of two stocks, the Laos’ Securities and Exchange Commission’s acting secretary-general Vathana Dalaloy announced that the exchange might add another three this year.
On this, Dr Yeah remained optimistic on the viability for Malaysia to cross-trade with the communist-governed Laos, adding that it would likely “gain momentum in view of the favourable growth prospects and cross-border investment within the region.”
Laos’ total trade in 2009 amounted to US$2.9 billion, 42 times less than Vietnam and more than 700 times below neighbouring China. With the new stock exchange, it was hoped that the country’s vulnerable and unbalanced financial system, which relied much on short-term financing from bank loans, would be improved by offering companies new sources for long-term capital.’
Ruled by communists since 1975, Laos began market reforms in the 1980s. Populated by a total of seven million people, its economy could
grow 7.5 per cent this year boosted by electricity sales to Thailand as well as
higher prices of copper, gold and silver, based on report by the Asian Development Bank.