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Regional Equity Strategy Q4 2007
Strategy Overview: Asian Equity
Asia's exposure to the US
The uncertainty surrounding US economic growth also makes us cautious about markets
with a higher degree of US exposure. Asia's growth integration with China is one of the
reasons for Asia's resilience against a slowing US economy in the last two years.
The ranking based on percentage of exports to US suggests Malaysia is most susceptible
to a US slowdown since it exports the most to US relative to its total exports. Meanwhile,
its dependence on US has not changed much. And contrary to popular belief, Korea has
become less US export dependent since 2000 and is now exporting less to US (as % of
total exports) than most Asian countries, other than Singapore, Hong Kong and India.
Fig. 22: Asia exports to China have surpassed that
of Asia exports to US in 2003
24%
22%
20%
18%
16%
14%
12%
To USA
To
China
10%
98 99 00 01 02 03 04 05 06 07*
Note: Asian exports to China may include goods for reprocessing
and re-export. Still many exports to China
serve final demand. See "The “two-fer” rules"
Economics-Markets-Strategy, 14 September 2007".
Fig. 23: Exports exposure to US
%
25
20
15
10
5
0
Singapore
Hong Kong
India
Korea
Thailand
Taiwan
Philippines
Indonesia
Malaysia
China
Note: Calculated as % of total exports to USA. IFS data
direction of trade statistics data as of 2006
Fig. 24: % change in exports exposure between
2001 and 2006
-10%
-20%
-30%
-40%
-50%
-60%
14
10%
0%
Hong Kong
Philippines
Singapore
Taiwan
Korea
Thailand
Indonesia
Malaysia
India
China
Fig. 25: Tech and electronics sector as % of total market
cap
%
60
50
40
30
20
10
0
Taiwan
Korea
India
Singapore
Malaysia
Thailand
Hong Kong
China
Philippines
Indonesia
Indices used are Datastream total market index.
Categories included are semiconductors, electronic
components, electricals and electronics equipment