Asian Development Bank President Steps Down

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.

Zarsha Leo Popular in Hong Kong

Zarsha Leo’s Hong Kong branch is especially successful thanks to its traditional American menu. It offers popular American dishes including hot dogs, burgers, onion rings and French fries, attracting both tourist and locals.

“Our classic menu is a sort of novelty in the area,” explains Zarsha Leo CEO Evan Burschkopf.

“We attract American tourists as well as Hong Kong residents with our All-American atmosphere, great music and live sports broadcasts.”

Real Estate Sector Attracts Investors to Indonesia’s Capital

China’s real estate market has been booming for quite some time, but new speculations are now pointing investors towards more southern regions.

A real estate forecast by PriceWaterhouseCooper and Urban Land Institute has revealed that Indonesia’s capital, Jakarta, will be the top place to purchase property in 2013, with the market surpassing even Hong Kong, Singapore and Sydney.

International investors have taken an interest in the region thanks to Indonesia’s remarkable economic turnaround over the past several years.

The survey says:

“Interest rates and inflation are under control, and while GDP is growing at around 6.5% annually, foreign direct investment is increasing at a much higher rate- 39% in the first half of this year. Driven by increased demand from foreigners and locals alike, office rents shot up 29% year-on-year in the third quarter, according to DTZ.”

The city’s growth and rising demand have bumped Jakarta up ten spots since its 2011 ranking. However, PwC warns that the market still has its risks. Inexpensive bank loans are a rarity, and it can be difficult to find a trustworthy partner. Disputed land may also pose a challenge.

 

Hong Kong Moves to Number 1 Spot in Index

Hong Kong is, today, one of the top financial markets in the world. In 2011, they took the number one spot on the World Economic Forum’s 2011 index of financial market development. And they were the first Asian financial center ever to do so.

The report looks at 60 of the world’s leading financial systems with over 100 variables evaluated. Hong Kong jumped from its previous fourth place status with concerns swirling about the financial stability in the United States and lower scores in the UK for their IPO activity. Certainly, this is great news for business people in the area. This includes entrepreneurs like Daniel Lam, CEOs like Andrew Brandler, and hedge fund managers like Seth Fischer, Hong Kong business people who will all benefit from this news.

The top 10 list remained relatively unchanged, other than the dramatic shift for Hong Kong; although Belgium did fall out of the top 10. It was replaced by Norway. The top ten, in order included:

1. Hong Kong

2. United States

3. United Kingdom

4. Singapore

5. Australia

6. Canada

7. Netherlands

8. Japan

9. Switzerland

10. Norway

As Kevin Steinberg, COO of World Economic Forum USA said in a statement that accompanied the report, “Hong Kong’s ascent to the top of our index marks a major milestone, the first time in the report’s history that the United Kingdom or the US didn’t come out on top.”

Chinese Luxury Consumerism Up

Although America and Europe are still caught in a recession that has seen a decrease in high-end luxury purchasing, China has seen an increase.  In 2010, the sale of luxury goods in China hit the 212 billion yuan mark, with a growth of approximately 25% on that figure in 2011.  Even more interestingly, new customers accounted for over 60% of the purchases.

Luxury companies from Cartier and Van Cleef to Hermes and Christian Dior all reported significant increases in their sales last year – and the Year of the Dragon should account for even higher sales.

With this information in hand, many luxury buyers are turning their attention to China.  At the moment, they represent 10% of the world’s luxury sales market. And, Chinese buyers aren’t just boosting sales at home; they are also accounting for more of the luxury sale purchases outside of China.

Just during the holiday season this past year, Chinese buyers accounted for $7.2 billion in sales in the US and Europe.  According to a report by the World Luxury Association, this is an increase of over 28% year-on-year.

QIC Talks Up Quantitative Investment in Asian Markets

According to QIC, the institutional investment manager, “big gains” can be made with quantitative investment strategies in Asian emerging markets.

“Emerging markets have been the focus of plenty of attention in the past few years; however, for a host of reasons investing in them has been a hit-and-miss affair,” explained QIC Quantitative Management managing director Michiel Swaak. “But more recently the situation has changed. Better, more consistent accounting standards mean the quality of data coming out of Asian markets has improved dramatically, providing the raw material required to establish meaningful models and identify opportunities that are most likely to deliver consistent alpha for investors.”

QIC first launched its quantitative Asia Pacific Market Neutral Fund in the summer of 2009, which has since proved especially lucrative.

 “We firmly believe that quant players have the jump on the market for a number of reasons. In our case, in addition to our extensive research and analysis capability, our team has many years of dedicated Asian experience,” Swaak said. “We’ve used that to develop a systematic trading process, which captures the relevant data as the markets continue to evolve, then feeds it into our flexible portfolio management infrastructure.”

QIC’s report states that the fund applies “comprehensive risk controls to all aspects of the portfolio, including net, gross, country, single-stock, currency, beta and risk factor exposures” in order to reach market neutrality.

“We believe our approach forms the blueprint for successful alpha investing in Asia, and we’re pleased to be able to offer an Australian dollar-denominated investment to Australian clients while we still retain the first-mover advantage,” Swaak said.

India Hopes to Grow Despite Europe’s Declining Economy

An International Monetary Fund official stated that the continuing struggle of Europe’s economy is likely to impact other economies, such as India, just as it affected private investment.

“I think it is also clear that in India, as in other economies, demand for exports would certainly be hit, and certainly for India, we’ve already seen effects on private investment,” said IMF Director of the Asia-Pacific Department Anoop Singh. “My sense so far is that the financial effects on Asia are being contained. We are seeing Asian banks, including Indian banks, stepping in where deleveraging is taking place from European banks.”

Singh continued, explaining that like the rest of Asia, India is focused on attracting private investment. However, this needs additional infrastructure investment in order to raise potential growth.

“So in India, what is planned, for example, is to introduce certain fiscal reforms that would give more space for higher infrastructure investment in India, among other factors,” Singh explained.

According to Masahiko Takeda, also of the IMF, “Reducing the fiscal deficit will create room for private investment to grow.”

He added: “But even more important are all sorts of fiscal reform measures that the Indian government can take to improve investment and business conditions in India, so that the private sector has a bigger incentive to increase their investment. And this has been the major emphasis we have put in our recent mission in India.”

India Hopes to Grow Despite Europe’s Declining Economy

An International Monetary Fund official stated that the continuing struggle of Europe’s economy is likely to impact other economies, such as India, just as it affected private investment.

“I think it is also clear that in India, as in other economies, demand for exports would certainly be hit, and certainly for India, we’ve already seen effects on private investment,” said IMF Director of the Asia-Pacific Department Anoop Singh. “My sense so far is that the financial effects on Asia are being contained. We are seeing Asian banks, including Indian banks, stepping in where deleveraging is taking place from European banks.”

Singh continued, explaining that like the rest of Asia, India is focused on attracting private investment. However, this needs additional infrastructure investment in order to raise potential growth.

“So in India, what is planned, for example, is to introduce certain fiscal reforms that would give more space for higher infrastructure investment in India, among other factors,” Singh explained.

According to Masahiko Takeda, also of the IMF, “Reducing the fiscal deficit will create room for private investment to grow.”

He added: “But even more important are all sorts of fiscal reform measures that the Indian government can take to improve investment and business conditions in India, so that the private sector has a bigger incentive to increase their investment. And this has been the major emphasis we have put in our recent mission in India.”

New Zealand Basks in Asian Investment

Prime Minister John Key revealed yesterday that New Zealand is becoming a major investment hub for Asian businesses and financiers, and the nation’s currency is expecting a boost. Some of the targets include government debt securities as well as farms and natural resources.

In fact, Shanghai Pengxin Group, a Chinese company, recently received permission to acquire sixteen dairy farms in New Zealand in one of the largest transactions ever sealed by the two countries.

When interviewed by the Wall Street Journal during a visit in Australia, Key said: “We are starting to see quite an increase in interest from Asia, particularly as they look at New Zealand and see the potential in the mining and exploration centers, we’ve seen significant interest there, and obviously in the agriculture sector where we have a pre-eminent position.”

Key added that it is the New Zealnd-based assets that so attract China at this time. Some dealings have caused minor tension in the region, however.

“They like the New Zealand story. They are a country that is significantly worried about food security. Not only do they want to buy food, but they are increasingly starting to buy products on the basis of health benefits.” Key continued, stating that “Where we see more sensitivity is around the purchase of real assets in New Zealand.”

China is currently New Zealand’s second-largest market, following close behind the neighboring Australia.

EU Debt Crisis May Not Hinder Asian Businesses

Asian businesses are feeling more secure thanks to lessons from the global financial slump and recovering U.S. banks. Analysts have admitted that while an all-out Eurozone crisis may affect demand for Asian products, exporters throughout the region are less likely to suffer as much as they did in 2008 when Lehman Brothers collapsed.

“The importance of trade finance to the global economy is better understodd now than in 2008,” explained Mark Williams of Capital Economics. “One of the factors that contributed to the recovery in 2009 was the $250 billion of trade-finance guarantees announced… In the event of a second global financial crisis, future guarantees are likely to be forthcoming.”

Often compared to the oil that greases a machine, trade finance is a key component in an economy. EU banks’ exposure to it in Asia is surprisingly high, relative to their loans in the region. Williams pointed out, however, that the Bank of International Settlements revealed that Eurozone banks are responsible for a mere 2.3% of total credit in the emerging Asia. Meanwhile, they have a 47.3% share of lending in emerging Europe, and 17.1% in Latin America.

The recent developments in trade finance have encouraged banks to increase interest rates.

“The reality is spreads have gone up fairly significantly- almost to the 2008 peak levels- over the last six weeks… But the higher spreads are here to stay,” said Ravi Saxena of Citibank.