By Jason Clenfield
April 28 (Bloomberg) -- The worst may be over for Asia’s exporters as interest-rate cuts and a $585 billion stimulus package get China buying again.
Singapore’s shipments to China jumped 29 percent in March from February, and those from Japan, South Korea and Taiwan also increased. AU Optronics Corp., Nissan Motor Co. and Hyundai Motor Co. this month all forecast higher sales to China.
“This is the start of something meaningful,” said Robert Prior-Wandesforde, a senior economist at HSBC Holdings Plc in Singapore. “The first effects of the fiscal-stimulus packages and the monetary developments, interest-rate cuts and so on, are starting to come through.”
China’s spending on roads, bridges and low-cost housing should contribute “strongly” to growth in Asia, the World Bank said this month. Goldman Sachs Group Inc. last week raised its 2009 growth forecast for China’s economy to 8 percent from 6 percent previously, citing the stimulus.
The People’s Bank of China has cut its benchmark interest rate five times since September last year, to 5.31 percent. Premier Wen Jiabao announced the nation’s stimulus package in November.
“Policy makers in China have been pushing the envelope on policy easing in only one direction -- for more and more,” said Helen Qiao and Yu Song, economists at Goldman Sachs. “We expect domestic demand growth to further strengthen.”
Taiwan’s AU Optronics said April 23 that liquid-crystal- display sales will rise 50 percent this quarter from the previous three months, helped by orders from China, where the government is spending $2.9 billion dollars to assist people in rural areas to buy televisions and other appliances.
Car Sales
Japan’s third-largest carmaker, Nissan Motor Co., said this month its sales in China rose 13.7 percent in March. About two- thirds of the cars the company sells in China are eligible for a government subsidy that cuts by half the sales tax on vehicles with smaller engines to 5 percent.
Hyundai Motor Co., South Korea’s largest automaker, said the sales tax cuts introduced in January should boost sales in its third-largest market by more than 11 percent this year.
“We now expect the Chinese car market to grow about 10 percent from a year earlier,” up from 6 percent, Beijing Hyundai Motor Co. President Noh Jae Man said in an interview at the Shanghai auto show on April 20.
Asian exports are also beginning to benefit after companies worldwide ate into inventories during the past two quarters instead of ordering new stock. Now when they need more goods, the orders translate faster into production and exports.
More Robust?
“Inventories have been drawn down to such an extent that companies are going to have to start rebuilding,” said Dwyfor Evans, a strategist at State Street Global Markets in Hong Kong. He’s optimistic that from the second quarter “we’re going to see far more robust numbers in terms of production and GDP.”
Inventories in the U.S. dropped for five consecutive quarters ending with the last three months of 2008, according to figures from the Commerce Department. The decrease in the first quarter of this year may have been the biggest since records began in 1990, according to a forecast by economists at Barclays Capital in New York, ahead of Commerce data due April 29.
Signs that the U.S. economy is recovering may provide further demand for Asia’s exporters.
Federal Reserve Chairman Ben S. Bernanke said April 15 the world’s largest economy’s “sharp decline” may be slowing. Confidence among U.S. consumers has risen two months running and sentiment last week reached its highest level since the September bankruptcy of Lehman Brothers Holdings Inc.
Clothes and Furniture
Singapore’s unadjusted shipments to the U.S. rose 17 percent in March from the previous month and China’s exports to the world’s biggest economy rose 33.3 percent, led by sales of clothes and furniture.
“Producers in the U.S. have slashed inventories sufficiently so at this point they need to reactivate the supply chain,” said Tim Condon, chief economist at ING Financial Markets in Singapore. “We’re not going back to the growth we had at the beginning of last year, but certainly there’s some positive growth.”
Economists caution that the increase in so-called sequential month-on-month trade doesn’t herald rapid economic recoveries. The International Monetary Fund last week predicted a global contraction of 1.3 percent this year, compared with its January projection of 0.5 percent growth. Komatsu Ltd., Japan’s biggest maker of construction equipment said last month that increased demand from China won’t offset falling sales at home, the U.S., and Europe.
Still Sinking
From a year earlier, exports are still plunging: In March Japan’s shipments sank 46.4 percent; Taiwan’s sank 35.7 percent from a year earlier and South Korea’s declined 21.2 percent.
Still, the year-on-year numbers aren’t necessarily the best indicators of a change in trend, according to ING’s Condon.
“You’re looking for turning points in the business cycle,” he said. “Identifying those is a lot easier with the sequential changes. I am in the ‘we-have-bottomed camp.’”
Month-on month, shipments from across Asia rose in March. Japan’s exports advanced 2.2 percent, Singapore’s increased 10.8 percent, the second monthly improvement, both seasonally adjusted. South Korea’s non-adjusted exports climbed 10.5 percent and Taiwan’s rose in March by 23.8 percent to $2.99 billion, including $1.31 billion from China and Hong Kong.
“There clearly was a moment around the turn of the year when we all thought that this was another 1930s; confidence fell off the edge of a cliff and companies de-stocked like there was no tomorrow,” said HSBC’s Prior-Wandesforde. “That initial shock has faded and that’s generated some improvement in world trade.”
To contact the reporter on this story: Jason Clenfield in Tokyo at jclenfield@bloomberg.net
Posts
No comments:
Post a Comment