Is Asian recovery for real? - Views on News from Equitymaster

Helping You Build Wealth With Honest Research
Since 1996. Try Now

  • MyStocks

MEMBER'S LOGINX

     
Login Failure
   
     
   
     
 
 
 
(Please do not use this option on a public machine)
 
     
 
 
 
  Sign Up | Forgot Password?  

Is Asian recovery for real?

Jul 21, 2009

Nobody seems to be too sure about a recovery unfolding in the global economy. For instance, in Asia, hopes of a recovery have once again started doing the rounds now that the Chinese economy has reported robust growth for the second quarter. What is more, optimism has been further fuelled by a better reading of economic progress in export-oriented economies of Japan and Singapore. However, no such positive signals seem to be emitting from the developed world which continues to be mired in a recession. And while there seems to be optimism with respect to the Asian economies, outlook for the global economy remains bleak. While many reasons have been cited as to why the global economic scenario will continue to be grim, the latest one is the problem of excess capacity. In fact, the World Bank has warned that the global economy will fall into a 'deflationary spiral' unless urgent action is taken to reduce high levels of excess capacity in the industry.

Justin Lin, who is the bank's chief economist, believes that there cannot be too much dependence on currency depreciation and exports to come out of this slump and a solution has to be thought of quickly to arrest the problem that will be unleashed by idle capacities everywhere.

The World Bank is not the only one with a gloomy outlook. Stephen Roach of Morgan Stanley is not too optimistic about the future either. Forget, the developed world, Roach is not gung-ho about the Asian economies either. He believes that the financial crisis is not yet over and there are many more write-offs to come. He says, "Seventy-five percent of the world's economies today are still contracting, and the biggest piece on the demand side of the global economy is the American consumer, who is dead in the water." And the rally in the stockmarkets is more a product of excess liquidity in the system augmented by stimulus packages rather than any marked improvement in either the fundamentals or the global economy.

If you take a look at the US economy, some economic indicators have risen for a third consecutive month signaling the possibility that the beleaguered economy could be emerging from the worst recession in five decades. However, what needs to be noted is that while the recession is not getting worse, which is indeed a positive sign, recovery is not going to happen anytime soon either. Thus, investors would do well to keep a vary eye on those who are unabashedly buoyant about the global economic recovery process and take a good hard look at the reasons underlying the same.

Equitymaster requests your view! Post a comment on "Is Asian recovery for real?". Click here!

  

More Views on News

6 Popular Stocks that Turned into Penny Stocks (Views On News)

Nov 27, 2021

A look at popular stocks that crashed big time and never recovered, i.e. which went from 'Multibaggers to Multibeggers'.

ONGC to NMDC: Here are 5 Stocks Value Investors Should Closely Track (Views On News)

Nov 26, 2021

Before investing in value stocks, research the company and gain insight into why the market is discounting it.

Infosys vs TCS: Which is Better? (Views On News)

Nov 26, 2021

In the post pandemic era, the top two IT companies in India are fighting to capture the growing demand for IT.

Has Your Mutual Fund Scheme Invested in Paytm? Here's What You Should Do... (Outside View)

Dec 1, 2021

One97 Communications (Paytm) shares continue to erode the wealth of investors. If any of your mutual fund schemes hold shares in it, you need to be careful and track its performance more carefully in future.

Is this India's 'Reliance Power' Moment? Here's How to Prepare for it (Profit Hunter)

Dec 1, 2021

Investors forget that market cycles are inevitable and there's no such thing as a free lunch.

More Views on News

Most Popular

Infosys vs TCS: Which is Better? (Views On News)

Nov 26, 2021

In the post pandemic era, the top two IT companies in India are fighting to capture the growing demand for IT.

This Multibagger Stock Zooms 20% After Dolly Khanna Buys Stake (Views On News)

Nov 24, 2021

Shares of this edible oil company zoomed over 50% in three days after ace investor bought around 1% stake.

6 Popular Stocks that Turned into Penny Stocks (Views On News)

Nov 27, 2021

A look at popular stocks that crashed big time and never recovered, i.e. which went from 'Multibaggers to Multibeggers'.

How to Find Your Next 10-Bagger in this Market (Profit Hunter)

Nov 19, 2021

The #1 make or break factor in your portfolio you shouldn't ignore.

MobiKwik IPO Opens for Subscription Soon. Key Things to Know Before Subscribing. (Views On News)

Nov 20, 2021

The Rs 19 bn issue is set to hit the market soon.

More

Become A Smarter Investor
In Just 5 Minutes

Multibagger Stock Guide 2022
Get our special report Multibagger Stocks Guide (2022 Edition) Now!
We will never sell or rent your email id.
Please read our Terms

S&P BSE SENSEX


Dec 1, 2021 01:04 PM

MARKET STATS