Notes on Asian markets

The various markets of Asia have seen some volatility in recent years, causing many investors (both professionals and amateurs) to reconsider their investment approach.

An examination of current trends can be used to provide guidance as to future performance levels, but there seems to be increasing concern about the overall direction of travel. What next for the markets of Asia? In this insight piece, we take a closer look at emerging patterns and likely future trends.

Japan’s GDP growth rate has seen considerable fluctuations in recent quarters, only emerging from recession in recent months. A growth rate of 0.6% during the last quarter of 2014 has encouraged many investors and economists to see a brighter future for the Japanese economy. With continuing decreases in housing investment and concerns about tax rates, however, it’s evident that there is considerable caution associated with looking too far ahead.

The Indian economy continues to see a significant pickup, although it’s noted that the country continues to run a substantial trade deficit. This can be attributed to the increase in non-oil imports that has been seen in recent months.

Indonesia has been hitting the headlines because there has been considerable growth in consumption, although some analysts are suggesting that the situation may not be quite as robust as it first appears. Household spending has not been rising steadily in those areas where pricing appears to be dependent on oil, or where interest rate changes are felt to be having an impact.

Concerns have also been raised about levels of investment and it’s noted that this may be a factor that is currently holding up growth. On the flip-side, however, it’s become clear that some of the growth in the Indonesian construction industry has been hidden by the overall figures. Some appear to be expecting continued growth in that sector.

Finally, attention turns to Thailand. The Thai economy has been altered by lower levels of government spending and it’s noted that the government does not appear to be hitting the sort of spending levels that have been hinted at in recent statements. It’s unclear whether there is any real hope of this situation changing soon and it is perhaps understandable to see the cautious approach that is being taken by some analysts.

There are particular concerns here, given that the Thai government has set out a policy of looking to boost economic growth via increased infrastructure spending. If those improved levels of infrastructure spending are not being witnessed, then it seems fair to question future trends. Many industry insiders are understandably keeping a close eye on events.