Mess in Myanmar

by Kent Ninomiya

We are just now realizing the epic scale of the disaster in Myanmar. A U.S. diplomat in Myanmar now says up to 100,000 people may have been killed by the devastating cyclone. About one million people are now homeless. Much of the country is under water and bodies float everywhere. There is stiff competition for what little food and fresh water is left. Disease and starvation will have a serious secondary impact. To make matters worse, much worse, is the military junta that runs the country with an iron fist. They are paranoid of outsiders and restrict the access of foreign officials and aid groups that are struggling to deliver relief goods. However, the scale of this disaster may force Myanmar's leaders to compromise. State television in Myanmar now says the government would accept aid from any country and that help had arrived Wednesday from Japan, Bangladesh, Laos, Thailand, China, India and Singapore. Could this be the beginning of real change for Myanmar? Could a major disaster be just what was needed to open up the government and perhaps spur a change in leadership? We shall see. One thing is sure. Myanmar will need a lot of rebuilding, and if their government allows it, foreign aid will pour in. Keep an eye on Myanmar.

Asia Economies Steady... for now

by Kent Ninomiya

Right now, the investment climate in Asia looks pretty good. The markets in the USA and Europe may have declined all they are going to in the near future. At the same time three of the best stock markets in Asia, Hong Kong, Korea and Singapore appear to be pretty close to bottoming out. Talk now is that this bear market may have been far less scary than previous believed. Still, thing could change at any time so stay tuned.

In general, the economies of Asia are relatively stable compared to the free fall we have experienced here in the United States. That is not to say there aren't dangers investing in Asia. You just need to be smart about it.

Standard & Poor's released a report today saying "the general credit outlook for Asia's sovereigns is still predominantly stable in the current financial and economic crisis but risks loom as a few governments may lack prudence in addressing increased inflationary pressures."

That means some Asian leaders may sacrifice long term economic stability in favor of short term measures that make their people happy. This happens when it's an election year or there's social strife. There's a bit of that going around Asia these days.

The S & P report says, the potential negative effects from the United States housing and economic problems has the potential to reduce Asian exports, lead to a decline in foreign direct investment and lower corporate profits." At the same time, increased demand for food, energy, and workers combined with a booming demand for everything is increasing inflation.

Asian governments will need to decide whether it's more important to hold down inflation or encourage economic growth. People aren't happy when they're hungry. There are rice shortages all over Asia. In pursuit of quick fixes, some governments are introducing extensive and market-distorting food price controls and export rations. They could pay for that later.

So where should you invest? It depends. Here's the latest breakdown country by country.

Indonesia: experiencing fiscal pressure due to rapidly rising fuel subsidies

Vietnam: inflation of more than 20 percent. Concerns about economic stability here

Thailand, South Korea, Malaysia, Japan and Taiwan: governments seem hesitant to take many risks because of political situations

India: seems to be somewhat insulated from the slowdown in the United States. The Indian economy is pretty closed and doesn't trade much with the US.

China and Hong Kong: much better chances of economic reform and policy change here to address economic concerns. Chinese leaders aren't as swayed by popular opinion and their people are used to letting the government take care of things. Besides, it's also the region of greatest growth and demand in Asia. This region presents the best investment environment at this time.