August 19th, 2011
11:46 AM GMT
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Hong Kong, China (CNN) – I’m a guy who pretty much looks to the bright side of things. You know, that “glass is half-full, silver-lining” kind of guy. But reporting profusely – almost manically – on the volatility of Asia-Pacific markets these past few weeks, I have this knot in my stomach that tells me things will get worse before they get better.

You see, right after the 2008 global financial crisis, Asia-Pacific markets made significant gains against their U.S. and European counterparts. Case in point, throughout 2009, the Dow rose about 15% while the main indexes in Australia, Hong Kong, Korea and China rose from 30% to 75%.

On the flip side, this year to date, Asia-Pacific markets have turned a darker shade of red than their U.S. counterparts. The Dow has lost nearly 6% but markets in our region have fallen from 11% to 17%.

With that, I dare say that decoupling theorists may have to wait a bit longer to be proven right. If anything, the volatility of this summer is proving that Asia remains linked – and perhaps overly sensitive – to shocks from the U.S. and Europe. It’s as if the waves generated from bad data in the U.S. or from sovereign debt issues in Europe just grow bigger – into tsunamis that eventually wash over Asia, raising investor fear and slamming confidence.

And there is no good news out there to serve as a barrier wall – either from the U.S., Europe or Asia.

In the U.S. this week, Morgan Stanley came out with that gloomy analysis that the West is on the brink of recession yet again. New jobs data showed unemployment applications spiked above the 400,000 level, signalling the job market is still stuck in the mud. And manufacturing activity in the mid-Atlantic region unexpectedly fell to its lowest level in 2.5 years.

In Europe, sovereign debt issues still plague eurozone countries such as Greece, Ireland, Italy and Spain. This week, investors were also underwhelmed by that highly-touted summit between German Chancellor Angela Merkel and French President Nicolas Sarkozy. The result of that meeting? Well, if you don’t remember anything ground-breaking or positive, then you’re not alone.

And here in Asia, some of the “best” news comes out of Japan and China. Tokyo’s latest GDP data showed growth wasn’t as low as expected for the April-June quarter. It came in at -1.3%. That negative sign means contraction. And that’s supposed to be a good thing? Meanwhile, China’s inflation rate for July came in at 6.5% – its highest in three years. At the same time, monetary policy-tightening measures targeting that inflation are also curbing growth. And Australia, rich in resources like iron and copper, could see a downturn in revenue if China’s growth slows.

So, don’t expect Asia to be the life raft of the financial world in 2011. The shocks reverberating from the U.S. and Europe may be too much to bear for a region dominated by export-dependent economies plagued with inflation and natural catastrophes.

If the West falls, Asia will likely fall with it.

Then again, maybe I’m wrong about all this and it will all simply turn around. The “glass is half-full, silver lining” guy inside of me wants you to prove me wrong. Please do. This time I don’t want to be right.



soundoff (28 Responses)
  1. AP

    Asians are great, but they do not fight. Asians compromise to move forward. This is a quality that is not present in the West. The region has the most people in the world and leads the world in all categories except weapons manufacturing. They are good people, and the world is a better place because of them. The West is all brawn and few brains. Let's get realistic people of different backgrounds should not live together because their work is inefficient. Asians figured this out long ago, and it is the reason the produce the majority of the world's products. Meanwhile, we have sacrificed our families, futures, and lives for nothing. People can only live in harmony if they are segregated.

    August 19, 2011 at 1:23 pm |
  2. Roman

    @AP: Asians do not fight? really? world war 2, japanese invasion of pacific, vietnam war, korean war, india-pakistan war, middle east wars (too many to count) and these are only the wars of the modern age

    August 19, 2011 at 1:59 pm |
  3. Andreea

    Dont worry about Asians, they work hard, strong education,discipline and again the most important thing for present and future strong EDUCATION.And actually they have MONEY.Thanks.Im not Asian but I do try to be realistic and to see what is going on

    August 19, 2011 at 2:30 pm |
  4. Paddy O'Furniture

    "Asians are great, but they do not fight?" Tell that to the Manchurians circa 1940.

    There are generalizations. And then there are stereotypes. And then there are stupid Nazi segregationist platitudes.

    August 19, 2011 at 3:36 pm |
  5. Ras Mekonne

    @AP, a curate's egg of an argument. Asia will fall flat on its face in a heartbeat if West and rest of World stops buying your "export dependent" fridges and flat panel tvs. What then? The usual self serving arguments one gets about Asians being hardworking this and that is all puff of hot air. Staying shackled to a desk for 17 hours a day does not lead to profitable work. As for neglecting families.....speaks for itself the lack of social skills prevalent over there.

    August 19, 2011 at 3:38 pm |
  6. Huh

    Really? recent history, WW2 comes to mind

    August 19, 2011 at 3:46 pm |
  7. Indian

    I disagree with some of that statement AP. Being Indian and born in the US, I feel that is not true. I believe a diverse background in the US brought plenty of innovations in the past that the entire world is now using on a daily basis, i.e. computers. Segregation I believe does not lead to innovation but rather regression and stagnance and this can clearly be seen with the caste system that is still in full force in villages in India. I do, however, feel that the current mentality towards working in the US has changed and has gotten much worse. My generation tends to expect outcomes instantly with little work; just as a majority of them have been raised, but now, we see this on a more global scale since our markets are not segregated but rather integrated.

    August 19, 2011 at 3:56 pm |
  8. joelle esther benyayer

    for sure yes after the japan trouble everything need to be rebuild and an advantage job for life mean the security for the invests example also salaries values less in china example and the capacity to adapts very efficient and quick to le soleil se lève a l'empire du soleil levant japan asia joelle esther benyayer

    August 19, 2011 at 3:58 pm |
  9. Dave

    The funniest thing i have ever heard, and i quote "people can only live in harmony if segregated" asia produce the majority of the worlds products because life is cheap in Asia.

    August 19, 2011 at 4:53 pm |
  10. Russel Jeffords

    Unfortunately, you are right, and we will see rioting in the streets of Dallas before this is all over....the welfare recipients and other rifraf will fight with stones, knives, fists, and teeth to preserve their ride on our backs.

    The only thing left is to collapse the currency ala Weimar and start over.

    No mo' BHO!!!!!

    August 19, 2011 at 6:36 pm |
  11. wysiwyg

    We all know what the war mongerers and wall street has done...most of the world is honestly disgusted.

    August 19, 2011 at 10:22 pm |
  12. magasin

    correct, if west goes down, so will east because they are interdependent. we need to compose ourselves and build a one government and one economy so we can join the intergallactic federation.

    August 20, 2011 at 2:11 am |
  13. Paulw

    Most of the countries in the world are very much interdependent as a result of the global commerce. Therefore if US and Europe go into recession, Asia is going down too. However, the question is how each part of the world will come out of this whole mess after a certain period of time?

    August 20, 2011 at 4:17 am |
  14. Naomi

    Yes, West, when you lose, you lose. No one can cure the disease of laziness and selfishness coupled with godlessness and secular greed. You just get toppled by others, that's all. But others don't have the transparency that they need. So West, you are still the lesser evil, for now.

    August 20, 2011 at 5:13 am |
  15. cheap a5 flyer printing

    repeatedly – almost manic – the volatility of markets in Asia Pacific in recent weeks, I have this knot in my stomach that tells me things will get worse before it gets better.

    August 20, 2011 at 6:43 am |
  16. barry

    I'm glad indonesian economy is largely driven (about 80% of GDP) by domestic consumption thus the negative development in the US and Europe should not affect the economy significantly. The author should highlight this fact when writing this article so as not to paint only gloomy forecast for the world economy.

    August 20, 2011 at 12:32 pm |
  17. Piaofu

    Asia has to redo their sums and wean themselves from over dependence on EU and US. I am sure they are at it
    if the increasing number of FTAs continue to be signed and sealed. It will take time, perhaps in 3 years time Asia
    would be completely shielded from the negative effects of EU's insolvencies.

    It will happen, I see it happening, the awakening and than the weaning, regrouping and redressing the over dependence on exports to EU and US. Asia will overcome. Collectively they are forming a market of almost 3 billion prospering consumers by 2015. There would be no trade barriers, a free flow of trade and peoples is ensured.

    The present EU debacle and a possible US insolvency is a good, timely lesson for Asia, and the rest of the world.

    The global economy would never be the same again, in the longer term.

    August 20, 2011 at 6:45 pm |
  18. Piaofu

    Asia has to redo their sums and wean themselves from over dependence on EU and US. I am sure they are treating this matter as important change of doing business. There is now an increasing number of FTAs being signed and sealed. It will take time, perhaps in 3 years time Asia could be completely shielded from the negative effects of EU's insolvencies.

    It has already happening, the awakening, the weaning, regrouping and redressing the over dependence on exports to EU and US. Asia will overcome. Collectively Asian countries are forming a market of almost 3 billion prospering consumers by 2015. There would be no trade barriers, a free flow of trade and peoples is ensured.

    The present EU debacle and a possible US insolvency is a good, timely lesson for Asia, and the rest of the world.

    The global economy would never be the same again, in the longer term.

    August 20, 2011 at 6:48 pm |
  19. mobile search app

    West is on the brink of recession yet again. New jobs data showed unemployment applications spiked above the 400,000 level, signalling the job market is still stuck in the mud.

    August 22, 2011 at 7:57 am |
  20. Nirmal Patel

    Contrary to all practical and scholarly analysis, it will be America which will charge back with an 'online economy' and the 'rest of the world' will see an economic slump over the time period that they will take to catch up with the American market.

    August 24, 2011 at 7:49 am |
  21. Carl van Zijll de Jong

    Correct, our help comes not from man!
    “Lord, I know the way of man is not in himself; It is not in man that walketh to direct his steps.”
    http://theworldmonetaryordertocome.blogspot.com/2010/11/introduction.html

    August 25, 2011 at 11:21 pm |
  22. xyng

    barbarian is from west, where they fight without brains. SunTzu is from East, where they wait for the right moment and make things right with a single blow. 1998 teaches ASIA a lot!!!

    August 26, 2011 at 10:29 am |
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