It appears that Asia is no longer looking westward in terms of investing in trade and investment. According to a recent Pricewaterhouse Coopers report, intra-Asian trade and investment has been increasing in the recent years, owing to reduced demand from the West, especially from the US. This trend is expected to accelerate. The report says, ?To give but one example, in just six years between 2000 and 2007, China?s share of South Korea?s exports rose from 11% to 25%.? Regardless of inflation, liberalising of trade regimes, is expected to lead to a greater process of regionalisation.
As far as mergers & acquisitions in the Asian region goes, regional companies, especially from Japan and China, ?are expected to take a very active role in the market in coming years?, says the report. Asia-Pacific financial services M&A deals were up from $68.5 billion in 2006 to $105.9 billion in 2007, according to figures released by PwC. The fact remains that Asia is not overtly affected by the US sub-prime crisis. In 2007, India was ranked fifth, by value of M&A in financial services, with deal value having increased to $6.9 billion from $1.2 billion in 2006.
According to a recent KPMG report that endorses the trend, there is a shift away from investments in the US, Japan, Singapore and the UAE, and a big increase in flows to Brazil, Russia, China and India (Bric).
?As investments go global, smart money is increasingly finding its way from the traditional investment destinations of the US & Europe to the Bric countries. The more recently recognised India opportunity is reflected in the fact that a significant amount of investment into India in the next five years is expected from first-time investors,? said Russell Parera, CEO, KPMG in India.
The survey mentions that there is a major shift of capital flow from the US, Japan and other European countries to the Bric countries, which have not been particularly affected by the US sub-prime crisis. Although the Asian region has been affected by inflation, the crisis is expected to tide over.
Meanwhile, another recent PwC report on the emerging markets shows that the Bric countries continue to offer ?interesting opportunities for investment?. The report mentions that although China is an attractive investment location, it is not among the top-10 most attractive destinations, as measured by the PwC manufacturing index. China, ranked 14th and trailed Bulgaria and Vietnam?the reason could be because the report does not accord special advantage to countries, based on the size of the local market.
India has ranked fourth while Egypt tops the manufacturing index in 2008, as although ?India?s GDP per capita remains relatively low due to the country?s fast-growing population?.
This factor ensures that low-cost labour is widely available in the country. All in all, as far trade and investment is concerned, the ?sun continues to shine steadily? on the Asian region.
As the axis of global economy shifts to the emerging giants of Asia such as China and India , removing trade barriers will help free-flow of trade in the Asian region.