Winds Of Change. Alliances Are Changing?
Southeast Asia’s Preferred Ally Switches in Favor of China
If Southeast Asian countries had to choose a strategic partner, slightly more would now prefer to align with China than the United States
Growing Importance of China as a Export Partner
Major portion of exports to South Eastern Asian countries is to China and it explains to some extent why Southeast Asia is turning sympathetic to China.
China’s slowing productivity growth and an aging population are expected to reduce its final demand, impacting regional economies like Singapore and other South Eastern countries, significantly serving China’s consumption and investment needs.
Rising Importance of Critical Minerals
A World Trade Organization (WTO) analysis from January 2024 revealed that annual trade in energy-related critical minerals has surged from $53 billion to $378 billion over the past two decades. This demand is projected to intensify, with battery demand expected to grow fivefold by 2030 and fourteenfold by 2050 to meet climate pledges
FDI Inflows to ASEAN
The majority of FDI flows into ASEAN are sourced from countries outside the region, highlighting the strategic importance of ASEAN in the international market. In 2023, extra-ASEAN FDI flows increased by 6.3% to reach US$208.0 billion. The United States (USA) emerged as the largest investor, making a significant contribution of US$74.4 billion to the region
Demography is Destiny …
If demography is destiny Philippines stands to gain the most it has the lowest median age in all southeastern countries
Buying Capital Goods Without USD
The recent trend suggests a strategic move by China to alter its trade practices, potentially moving away from a reliance on the US dollar.
China’s Automobile Bet
China has been betting on the EMs for its auto market and it is delivering the desired outcomes
China’s Automobile Bet
China is leading EV manufacturer if EMs impose tariffs like US then it will dampen the Chinese car market.
EM Government Bonds Outperforming US Bonds
EMs are behaving like DMs and DMs are behaving like Ems
Fiscal prudence is driving up bond yields for EMs
EM Equities Outperforming US Equities
EM equities are outperforming US equities. India and Mexico are the shining stars.
With robust economy and great demography Mexico and India are set to enjoy a bull run
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