Wednesday, March 26, 2008

Code Yellow for the Asian story.....

I am live on the ground in Singapore on business trip and I find the "evidence"
here quit disturbing relative to the ALL the positive buzz I keep hearing about Asia in London and New York... here is whats bothering me:

1. Inflation, even Singapore is having run away inflation and the issue is on the forefront on everyeones mind now... each and every interview, talk I have focus on how to deal with inflation when u have given away your monetary policy to a bunch of incompetent people in Washington....

2. Negative real rates - last time I was here (May 2007)... they liked it - now they feel is erodes their wealth and leave them options to "secure" the future, i.e confidence in the future dropping HARD

3. Wages - clearly the new labor contract law in China has impacted input structures....4. Shipping - new ship building has moved from low 20% self financing to mid 30s..and you still can't do deals... Greeks buying evetything no one can get anything built unless they find Chinese shipyards- (the demand is there - the financing not)

4. Real Estate - prices "plateaued" - new building rising everywhere - saturated?

5. China...resouces.... input prices of mining is running @ 450-500 US an ounze ...lets hope reflation will keep gold, metals high as costs is EXPLODING -

6. Banking ... neg real rates ==> real estate bubble.... inv. bank income in Asia like for like down 50% on the year... dont get me wrong..

Im still long term bullish on Asia.. but being on the ground the is considerable issues...far more than we see from our ivory towers in the US and Europe - ..........but as always merely poor European Fund Mgr. lost in the world of finance.. Steen

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