We’re in the third year of the pandemic and travel in Asia is still “heavily restricted”, says Chad de Guzman in Time. Most Asian countries have done an excellent job fighting the pandemic: South Korea has recorded 12 deaths per 100,000 people, compared to 259 per 100,000 in America. But the arrival of Omicron has triggered a return to 2020-style measures.
Japan has banned most foreigners from visiting. Hong Kong “which once boasted one of the world’s ten busiest airports… banned all flights from eight countries including the US and the UK” earlier this month. Yet as cases of Omicron spike across the region, “experts question whether continuing to stay closed to tourists, students and business travellers” is still “an effective strategy”.
Southeast Asia in recovery
Tight restrictions and slow vaccine rollouts have weighed on stocks. The MSCI Asia Pacific index underperformed European and American shares in 2021, finishing the year down 2.5%. Southeast Asian markets have been particularly dull. The regional MSCI Asean benchmark has been flat over the last three years, even as the wider emerging markets index delivered gains of 11% a year. Vietnam’s VNI, which soared 35% last year, has been the only bright spot as other markets lagged global averages.
MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Delta wreaked havoc last summer, says Trinh Nguyen of the Carnegie Endowment for International Peace. Lockdowns disrupted Malaysian semiconductor production and Vietnamese textile manufacturing. GDP in the latter country tumbled 6% year-on-year in the third quarter.
However, better times may be coming. Vaccination rates in most countries in the region (with the exception of Indonesia and the Philippines) are now comparable to those in the UK. Southeast Asia is also a potential winner from worsening US-China relations. Companies are diversifying their supply chains, which is bringing more inward investment. Trans-Pacific “jockeying for power” has “allowed Vietnam to escape the United States’ currency-manipulator list”.
Commodities, not tourism
“The nexus of Asia-Pacific economic growth is shifting to Southeast Asia amid maturing recoveries in northeast Asia,” says RBC Capital Markets. “The retreating pandemic and higher commodity prices have catalysed a brightening growth outlook for Malaysia and Indonesia”. The latter is a significant coal and oil exporter.
The outlook for tourism is less encouraging, says The Economist. The sector “accounted for over 12% of the region’s GDP before the pandemic”. In 2019, Chinese tourists “made up 12 million of Thailand’s 39 million international arrivals”, but Beijing’s zero-Covid policies mean few Chinese visitors are travelling overseas anymore. “In Cambodia the temples of Angkor Wat are eerily empty.”
-
UK sets out crypto regulatory proposalsThe government has tabled legislation that sets out a regulatory framework for cryptocurrencies, while the regulator will consult on balancing innovation and consumer protections
-
What does an interest rate cut mean for my pension?Interest rates have been cut from 4% to 3.75%. For pension savers and retirees the effects of the drop will depend on the type of retirement pot they have, but could be significant.
-
British blue chips offer investors reliable income and growthOpinion Ben Russon, portfolio manager and co-head UK equities, ClearBridge Investments, highlights three British blue chips where he'd put his money
-
Coreweave is on borrowed timeAI infrastructure firm Coreweave is heading for trouble and is absurdly pricey, says Matthew Partridge
-
Renewable energy funds are stuck between a ROC and a hard placeRenewable energy funds were hit hard by the government’s subsidy changes, but they have only themselves to blame for their failure to build trust with investors
-
Profit from document shredding with RestoreRestore operates in a niche, but essential market. The business has exciting potential over the coming years, says Rupert Hargreaves
-
The war dividend – how to invest in defence stocks as the world arms upWestern governments are back on a war footing. Investors should be prepared, too, says Jamie Ward
-
Literacy Capital: A trust where great returns fund a good causeThere’s plenty to like about specialist private-equity trust Literacy Capital, says Max King
-
An AI bust could hit private credit – could it cause a financial crisis?Opinion Private credit is playing a key role in funding data centres. It may be the first to take the hit if the AI boom ends, says Cris Sholto Heaton
-
8 of the best ski chalets for sale nowThe best ski chalets on the market – from a traditional Alpine-style chalet in Switzerland to an award-winning Modernist building in Japan’s exclusive ski areas
