There's a lot of angst and uncertainty out there right now. The IMF just lowered its forecasts for global growth, the US faces a fiscal cliff come January and most of Europe is in recession already - even if the ECB did give the euro a little extra breathing room with its OMT  program a month ago. And speaking of OMT and (the Fed's) QE3 - emerging markets aren't exactly tickled pink about these programs. The fear is all that money will come washing over to Asia (like in 2010) and push currencies north and already weak exports further south. Nothing but nothing looks good right now and even solutions are problems if you're on the wrong side of the world!
From Asia's side of the world we ask 3 questions:
1) Where is global growth going to come from in 2013?
2) Why is China running at a 7.5% rate of growth and why is it likely to rise to 8.5% in 2013?; and
3) What do OMT and QE3 really mean for Asia?
David Fuller's view Although I commend this report to you, I know that not every subscriber will have the time to read it. Therefore, I post these two additional paragraphs from the DBS report:
What's Asia done over the past four years? What everyone said it could never do without the final demand of the G3 to drive it - it grew. And grew, and grew. Today (2Q12), output is nearly 32% higher than it was back in 2Q08.
Eight percent growth per year for four years - a compound rate of nearly 7.5% per year. That's almost as fast as Asia grows in normal times. But it did it right through the biggest financial / economic crisis in 100 years. And without the help of Europe and without the help of Japan and without the help of the US. 32% growth in Asia; 0% growth in the G3.
My view - I maintain that Asia remains the world's lead engine of GDP growth and that it is both consolidating and strengthening this position. However, we have all learned that economic growth does not necessarily translate into stronger stock market performance over the short to medium term.
Most of Asia has underperformed Wall Street for several years. There are various reasons for this, including beta, economic governance which varies from country to country, and a clear tendency among western investors to repatriate capital in times of crisis. However, the biggest factor in my opinion is supply. This has weighted on China's A-Shares for several years as often mentioned in Fullermoney.
For this reason, I maintain that an improved performance by China's mainland stock market (weekly & daily) would have a strong, positive leash effect on the region generally. We have seen some upward dynamics recently and these often presage additional recoveries. The next positive step would be a clear and sustained break above the September rally high near 2250. Hong Kong (weekly & daily) may be leading the way.