Diary of a Financier

“Asian Growth Is Slowing”

In Economics on Wed 27 Jul 2011 at 08:15
  • Both CAT & UPS indicated slowing growth in Asia.
  • China is a bear threat now, Shanghai even decoupling from Hang Seng.
  • On the other hand, Korea looks bullish in the short-term.

During their recent earnings calls, both Catapillar (CAT) and UPS (UPS) have intimated that Asian growth is slowing.

From UPS’s call this morning, we get a reflection on past growth softness:

…Now let’s turn to the International segment. Revenue was up more than 13% on strong volume growth of 6.2%. Export volumes increased over 8% with growth around the world. Europe and China continued their momentum of solid growth, although we did see slowing in the rest of Asia.

From CAT’s conference call last week:

I think all of us knew [China] was growing too quickly. It was a boiling hot economy the last couple of years…

China looks bad fundamentally & technically (all fractals), and I’m sure there’s a risk of contagion there.  Looking bearish on all accounts, the Shanghai is even decoupling from the Hang Seng:

SHGIDX v HSI daily

SHGIDX v HSI monthly

I have to be honest though, Korea looks rather vigorous.  In the short term, bullish:

KCI daily

In the long term, Korea will try to defy gravity:

KCI monthly

I can lump Taiwan into Korea’s bullish camp too.

–Romeo (hattip Cullen Roche)



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