Just off the plane after a trip to Asia where we met with Chinese & South East Asian companies and key opinion leaders. Yes, macro conditions are unfavourable. USD money is more expensive, foreign investments are hard to come by, and trade tensions set a clear path towards a global slowdown. Besides, China has no intention to curb its reform agenda, tightening policies in real estate, education and healthcare. As a result, valuations are coming down from a peak and back to earth.
Nevertheless, we were positively impressed by the level of preparedness that we’ve seen compared to summer 2015: USD exposure is hedged, financial teams are strong with talents, funding channels are more diverse. To be sure momentum is still there with technology a driving force, with AI, machine learning, and crypto disruption aplenty as we strolled by the Singapore Fintech Conference. The Asian consumer is rising, with a $45bn ticket on Singles Day as a reminder, and being propped up by consumption-orientated measures such as tax cuts.
There remains that the world is becoming increasingly bipolar, with parties forced to choose a camp between China and US, as Singapore PM vividly expressed at the latest ASEAN conference opening. Market-wise, the US have been the great winner of this contest, thanks to a strong economy warranting increasing rates and a strong dollar….until the high level of debt becomes unsustainable and the sun sets only to rise again in the East.
360 Advisory – Markets