Asian Development Bank

Popularity of Asian Investment Trusts

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Foreign investors who are seeking a strong investment region should look into Asian investment trusts according to some experts.  As the economies there mature, and the youth is indicating signs of good long-term prospects, the area is ripe for investments.

Despite the fact that in early 2016 Asian markets did it tough, things picked up during the rest of the year and the region encountered economic growth as well as company profits, both of which bolstered confidence in the Asian economy.   For people in the UK this fact has been particularly welcome. The Asia investment trusts delivered great returns, along with other overseas trusts, since when they converted back into pounds stirling, the returns are increased as the pound drops. As Head of Global Small Cap and Asia, Matthew Dobbs explained:

“Sterling returns have obviously been flattered by the weakness of the pound following the Brexit vote, but regional markets have made some progress thanks to the stabilisation of the Chinese economy, accommodative monetary conditions and modest expansion in economic activity. For 2017, we remain concerned that near-term stabilisation in Chinese economic conditions has been at the price of delayed economic restructuring and ultimately unsustainable credit growth. On a more positive note, global recovery would be helpful for the region, although subject to no material increase in trade barriers. With new leadership in Taiwan, the Philippines and, potentially, Korea, political developments will remain a focus.”

Furthermore, according to the Asian Development Bank’s recent report Asia’s $527 billion made it the top FDI destination in 2015.  And of the $1.76 trillion international FDI, almost a third went into Asia. The increase in Asia from 2014 was 9 percent.

Asian Development Bank President Steps Down

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Asian Development Bank president Haruhiko Kuroda has stepped down from his position to serve as governor of the Bank of Japan. Having worked at ADB for eight years, Kuroda was the longest serving president at the bank.

During a speech, Kuroda said he hopes that the ADB will continue to support Asian countries while taking advantage of growth opportunities and responding well to crises that may arise.

“Much remains to be done in a region still faced with many challenges,” he said. “I have every confidence in ADB’s continued success in addressing them.”

According to P Chidambaram, Indian Finance Minister and Chairman of the ADB Board of Governors, Kuroda played a critical role in the bank’s journey to becoming the region’s leading development institute.

“His extraordinary vision and leadership have enabled ADB to significantly advance its mission of poverty reduction and sustainable economic development in Asia and the Pacific,” he said.

Trade Financing in Asia

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The Asian Development Bank is expecting a sudden increase in demand for trade financing as European banks limit their lending in the face of the ongoing crisis.

“The trade-finance program is filling persistent market gaps, but it will become even more important,” said Steve beck of ADB. “With some major European banks retrenching from the trade-finance business, we see that the gaps are increasing.”

Beck predicts even more growth in the operation, which is already worth $3 billion. A credit crunch will most affect smaller emerging markets such as Bangladesh, Sri Lanka and Vietnam. There is risk for a collapse similar to that of 2008, which will inhibit growth across the continent and add to the global recession.

Now, European banks are scrambling to raise their capital ratios, and Morgan Stanley estimated that many lenders would lower their leverage by $2 trillion to $3 trillion.

“European banks that had exposure in Asia have had to repatriate some of the money from Asia, and that’s why you see volatility” in the area’s exchange rates, explained Iwan Azis, also of ADB.