More positive economic news is coming out of China – industrial production figures for August were up more than expected, and the latest retail numbers are also ahead of what the market was anticipating.
It appears that Beijing’s plan is working – pulling back on the overheated growth pace and putting in place policies that encourage growth at more moderate (but still strong) levels. Those who predicted a hard landing are looking wrong.
Romeo Dator, who co-manages our China Region Fund (USCOX), is among the more than 1,500 investment pros in Hong Kong this week for the 17th annual Investors’ Forum sponsored by CLSA Asia-Pacific Markets. This is one of the region’s biggest gatherings, with some 500 CEOs and CFOs also expected to attend.
Romeo sent back notes from the conference’s first day to the team in San Antonio – below are some of his thoughts and observations.
- Consensus from day 1 is that Asia will outgrow the West in 2011 but the main thing that held China/Hong Kong back was a wall of worry that China could not grow without vibrant U.S. and European economies.
- Eric Fishwick (CLSA chief economist) sees only 1.25% growth in GDP for the U.S. in 2011 and no growth for the European Union. As a result, he thinks all countries will be stimulating their economies again in 2011.
- Chris Wood (CLSA chief equity strategist) sees deleveraging as the primary theme and he expects it to remain that way until the evidence shows otherwise. Sees 10-year Treasury yield hitting 2% and 30-year hitting 3%.
- One area of continued growth expected to be the Internet. Another bullish area is gaming due to Macau and Singapore with the strength in Macau expected but Singapore doing much better than expected. In telecom, increased data penetration via netbooks and smartphones is foreseen.
- In the Philippines, Alfred Dy (top-ranked Philippines analyst) thinks 2011 will be a very good year as investors will give the new president a grace period.
ISI Group also had some observations about China today. It sees continuing U.S. pressure on China paying off with greater-than-predicted appreciation of the yuan against the dollar by year-end. And though inflation in August was above the 3 percent target, ISI says, the longer-term inflation risk is not likely to be a major policy concern.
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