Friday, 22 August 2014

Asia today - trade, Chinese anti-trust crackdown and Japan's consumption tax impact

Trade is at the core of the Asian economy. Colonial First State analyst James White (@jpwwhite123) in a new analytical paper (link here) makes the good point that the composition and absolute level of Chinese growth has been negatively impacted by the slowdown in global trade.

So far, so conventional.  More controversial however is the observation that global trade is not only improving but that China's continued building of global export market share (see below) with improving trade flow information as shown by Taiwan, South Korea and (my observation earlier in the week, see link here) even Japan could be worth an extra 0.5-1% for the Chinese growth statistics each year.  A useful contribution to have if this becomes the reality.

Trade is still controversial.  As the Li&Fung numbers yesterday showed conditions for a business focused on global trading/related logistics remains difficult...

...and look at the signalling from their share price!  A fuller update on the Li&Fung share looks sensible to come.  

Staying with trade-related issues, a nice graphic in today's Financial Times pertinent to the anti-trust debate/crackdown.  To me the text observation (in small print) of taxation differences in all important but surely the biggest anomaly remains the differential in the sales of 'foreign brands' versus 'Chinese brands'.  I think that changes over time...and which may be an indirect aim of such crackdowns in any case. 

Finally Japan and an indication if we needed it that the recent sales tax hike impact has been historically large compared to other equivalents:

More stimulus Mr Abe!

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