HONG KONG: Global banking giant HSBC has dismissed fears of a global credit crisis having a large impact in Asia. It said that overall, Asian economies remain robust, thanks to strong domestic demand.
The US mortgage crisis has put America on a cautious footing and cut its demand for Asian exports - sparking fears that this will put a drag on the growth of regional economies. However, Hong Kong-based economists from HSBC have dismissed those fears. Frederic Neumann, senior Asian economist, HSBC, said: "We've seen a lot of news reports and commentaries suggesting that Asian economies are likely to decelerate very sharply into the year end. But I think Asian economies are fairly sound."
The most sound economies appear to be China and India, which can tap on strong domestic demand, which is buffering against the negative effects of a US slowdown.
However, HSBC said Taiwan and Thailand are among the those most vulnerable to weakness ahead because of a rapid slowdown in exports and sluggish domestic demand.
The bank said that those looking to invest should stick to places which are considered more developed markets or those that are relatively less affected by inflation.
Garry Evans, chief equity strategist, Asia-Pacific, HSBC, elaborated: "Singapore, (a) developed market, (is) relatively less volatile. (In) China, we don't see (inflation) as being a particularly big issue; (its) earnings growth is fairly visible. Korea, (an) OECD member, (is) one of the more developed markets in Asia."
Although Asian economies remain sound, HSBC said economic imbalance is something that policymakers need to keep their eye on.
It said they must tackle the issue of inflation to keep growth from suffering in the future. - CNA/ms
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