Our Thoughts > Financial Dynamics Structurally Changing in Asia
Financial Dynamics Structurally Changing in Asia
Asia's balance of payments has undergone a structural shift over the past five years, with lower current-account surpluses.
“We have seen a shift in investment behavior in Asia where trade and investment flows were predominantly going from Asia to the West: The ‘traditional’ model was for Asian countries, led by Japan and followed by China, to export goods to the West. These Asian countries would accumulate reserve surpluses and invest their cash surplus back to the West by buying US Treasuries and, to a lesser extent, European assets,” said Gilles Plante, Asia-Pacific chief executive officer for ANZ.
Asia’s balance of payments has undergone a structural shift over the past five years, with lower current-account surpluses. However, reserve accumulation has continued as capital inflows have, to a large extent, offset the decline in the current account.
The clear trend ANZ has been seeing is a substantial rise in intra-Asian flows, which the bank thinks will be an increasing feature of the Asian financial landscape.
We’ve seen resilient and continued economic growth in Indonesia, the Philippines, Malaysia, and Thailand. Stable consumption of the growing middle classes in the region is attracting many investors as well as apparel and food retailers. Plante puts it in good words…”the trend of local/Asian multinationals finding new markets within Asia is exciting as it opens the door to new business opportunities.” We also believe this is true for non-local global players.
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