The slowdown in economies such as Indonesia and Thailand is part of a “very, very global” weakness, World Bank Chief Economist Kaushik Basu told reporters in New Delhi yesterday.
The U.S. recovery “was so slow that even the slightest pick up is looking like a pick up,” Basu said. “I don’t think the Asian situation is any worse. In fact, if anything, Asia is probably better off than the rest of the world.”
That may not help markets in Asia as money continues to flow back to Europe and the U.S., said Oliver at AMP Capital. Norway said today its economy expanded in the second quarter after a contraction in the previous three months. The Federal Reserve Bank of Chicago will release a report on U.S. economic activity for July.
“Asia will still be a stronger part of the world than the U.S. or Europe but compared to people’s expectations Asia is likely to come in a little bit lower than expected,” he said.
The IMF in July forecast global growth of 3.1 percent and projected advanced economies would expand 1.2 percent this year.
Stocks Opportunity
“We see this drop as an opportunity to buy selectively those stocks that have been overpriced” such as banks and consumer shares, Kiekie Boenawan, Jakarta-based head of investment at PT Schroder Investment Management Indonesia, wrote in an e-mail yesterday.
Investors will be scanning data from Chinese factories to Malaysian growth this week for further signs of weakness.
An Aug. 22 flash reading for China on a manufacturing purchasing managers’ index by HSBC Holdings Plc and Markit Economics is expected to come in at 48.2 for August, from 47.7 in July, according to the median economist estimate compiled by Bloomberg. A reading below 50 indicates contraction.
Malaysia’s central bank on Aug. 21 may post data showing 4.7 percent economic growth in the second quarter from a year earlier, after rising 4.1 percent in the January-March period, its slowest rate since September 2009, according to the median estimate of economists in a Bloomberg survey.