China uplifting the whole Asian economy
Updated: 2005-10-10 09:01
The business landscape in nearly all Asian
countries and regions looks pretty rosy, and global fund mangers say a booming
China has played a central and largely benign role.
China is definitely the locomotive uplifting all its neighboring economies,
which also have helped the former by injecting huge investments, analysts said.
Currently, stocks in Asia have been sprinting ahead. Markets in Singapore,
South Korea and India have approached or surpassed previous highs, and others,
like those of Hong Kong and Indonesia, are at their best levels since the
economic crisis of the late 1990's.
The rallies have produced big gains for global mutual funds specializing in
Asian stocks. The average fund that invests in Asia, excluding Japan, was up
30.4 percent in the 12 months through September.
Managers of Asia funds have no trouble explaining the strong performance, but
some question its staying power and are downshifting to stocks in industries
less susceptible to economic swings. Some global fund managers also express
reservations about Asia, although others embrace the region and expect continued
Yet everyone seems to agree on one idea: that China has had a central and
largely benign role. From a distance, China might look able to muscle aside the
industries of smaller Asian countries and to squeeze their markets, given its
cheap labor and huge manufacturing capacity. But analysts say the formerly know
Four Asian Tigers, South Korea, Singapore, Taiwan and Hong Kong, have instead
grabbed their big neighbor by the tail. They have invested huge sums in Chinese
mainland factories, and so have made growing profits.
"As China has grown, it has brought up the rest of the region with it," said
Edmund Harriss, manager of the Guinness Atkinson Asia Focus fund, in an
interview by The New York Times.
Mark Headley, president of Matthews International Capital Management, a firm
specializing in Asia, said the rest of the region had also brought up China, by
furnishing money and expertise.
"It's the Taiwanese that built most of the mainland's manufacturing, and now
the Koreans are there in a big way," he said. "The companies that really grasped
the opportunities 10 years ago are reaping the benefits."
So are Chinese workers, whose standard of living has soared. That has
benefited companies throughout Asia, which have a big, new consumer market to
"Because Chinese GDP is growing at 8 to 10 percent, it provides a
huge source of incremental demand for other Asian countries selling to domestic
Chinese consumers," said Ben Walker, a manager of international equity funds at
Gartmore Investment Management.
The low cost of Chinese-made products also helps the region, Mr. Walker said.
"Increasing supply from China is keeping inflation lower in Asian economies," he