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International location | 27
Close up on the
Far East
China and neighbouring countries have certainly
not remained immune to the recession
by Jean-Charles
Sambor, Senior Vice
President of Emerging
Markets Research and
member of SGAM’s
Strategy and Economic Research
team, Société Générale
I
n 2008, we had three strong convictions
regarding Asia markets: (i) Asian
exports would tumble; (ii) the Asian
equities decoupling story was a myth;
and (iii) Asian inflation was temporarily
being driven by soaring commodities
prices but would have to go down significantly.
In 2009, we expect that (i) Asian growth will
continue to decelerate quickly, driven by a
simultaneous decline in all GDP components
(investment, consumption and exports) - it will
not be a collapsing export story only; (ii) Asian
inflation will continue to fall rapidly with some
significant country specific deflation risks; and
(iii) Asian markets are unlikely to rally as long
as global risk appetite remains depressed. Still
we continue to see some interesting investment
themes on a very selective basis, especially in
China.
A Gloomy Macro Outlook
The sharp slowdown in Asian growth will con-
tinue, and it will be painful. More disappoint-
ments in China are very likely in the first half
www.investmentinternational.com April 2009 Investment International
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