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.
Subscribe to 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.”
-
Lloyds axes foreign currency fees for Club Lloyds customersClub Lloyds customers will be able to withdraw their money abroad without incurring any extra fees
-
How to invest during stagflationTrump’s tariffs look poised to push the global economy into a period of stagflation. We look at how to ensure your investments can survive a global slowdown.
-
Falling revenues and mounting debt spell trouble for Jumia TechnologiesStruggling African e-commerce platform Jumia Technologies looks headed for the exit, says Dr Matthew Partridge.
-
Next reports £1 billion in annual profits for the first time – what's next for the retailer?Clothing retailer Next has become only the fourth member of its sector to surpass £1 billion in annual profits. What does this mean for the company's future?
-
Best of British bargains: cash in on undervalued companies in the UK stock marketOpinion Michael Field, Chief Equity Market Strategist, EMEA, Morningstar, selects three attractive UK stocks where he'd put his money
-
Building firm Keller presents low debt and ample scope for growthGeotechnical contractor Keller, which supports vital global infrastructure, boasts rising profits and a cheap valuation
-
PZ Cussons share price down 75% in last decade – why it's one to watchOpinion Once-strong consumer-goods business PZ Cussons is out of favour with the market. That spells opportunity for investors, says Jamie Ward
-
Cash in on the biotech sector with specialist trust BioPharmaOpinion BioPharma has an attractive niche in lending to asset-rich biotechnology companies
-
India's stock market decline wipes out $1.3 trillion in market value – can investors stay optimistic?More than $1 trillion has been wiped off from India's stock market after investors turn to China. Has the emerging-market darling hit rock bottom?
-
Pensions revolution: how to profit from the trends shaping the UK pension systemThe UK pension system is one of the biggest in the world. Big changes are under way, says Rupert Hargreaves
