Newsletter By 2019-12-06
Economic development is the essential reason behind "asset shortages" in China. ANBOUND economists noted that the economy is hitting some roadblocks, but the growth slowdown, and market confidence insufficient. This leads to lower expectations on asset appreciation. From time to time, the "asset shortage" appears to be divided into two status. The first is the relative "asset shortage" due to the expected difference in investment returns. The second is that the economy is working not well, either wallowing in a slowdown or even negative growth. Another view is that the economy has its natural laws of development, and "asset shortage" should be reviewed from the long-term perspective. Without major reforms, "asset shortage" would become the "new normal", especially for investors.
>>As the economic co-operation between Malaysia and China continues to strengthen, Chinese investment increases as time goes by. ANBOUND researchers discussed the business opportunities from the macro and micro perspective. There are five states in Malaysia, namely Kelantan, Terengganu, Pahang, Sabah and Sarawak that are relatively underdeveloped and will obtain substantial financial assistance as well d auxiliary policies from the Federal Government. In view of the current economic situation, two states in East Malaysia (Sabah and Sarawak), Kelantan and Pahang located on the East Coast of the Malay Peninsula, and Kedah on the West Coast are having biggest investment opportunities. As the political economy of Malaysia is rather complicated, investments in Malaysia should not only take into consideration the national policies, but also to understand the conditions of different places. It is only through this understanding that the investments could meet the demands of local government and guarantee the economic interests.
>>In today's China, regardless of the fashion industry, culture or art, products and services mostly target at the youths. The naivety and low age within the society caused by sub-replacement of fertility means difficult to recruit more mature professionals. On the contrary, those emotionally-inclined young people are going up, so that lower quality is around the social environment. The decline of young population leads to the fragmentation of the social order, system, rules, ideas, traditions, and even cause the industry to lose the direction and the disappearance of traditions. ANBOUND has introduced the concepts of ageing and sub-replacement fertility into China’s public policy, with many far-reaching implications to China, the most populous country in the world.
>>The successive interest rate cuts by the U.S. Federal Reserve have triggered a wave of interest rate cuts by central banks around the world, with a growing number of countries facing zero or negative interest rate. This global excess liquidity and overproduction are the main reasons for the current falling interest rates. For China, the rising demand for liquidity, inflows of foreign capital and a continued decline in the real economy could soon lead to a monetary environment of zero interest rates. A future environment of low or zero interest rates will, in turn, make existing monetary policy tools less effective. In China, the problem is even more acute. China is facing structural consumer inflation and production deflation at the same time. Neither the uses of massive easing policy nor targeting monetary policy can reverse the trend of the economic slowdown in the future. In a zero-interest rate environment, there is an urgent need to redefine and choose the objectives and tools used in monetary policy. For the real economy, falling interest rates mean that investors may not increase investment. In the case of overproduction, liquidity and credit stratification will still occur and bring new problems to small and medium enterprises. The zero-interest-rate environment also means that it is now more urgent to promote the reform of financial supply and solve the problem of the monetary transmission mechanism.
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