HONG KONG (MarketWatch) — The Greek sovereign-debt crisis and fiscal frailty of many European nations can reinforce the idea that the time has come for Asia — state finances here are in good health, supported by business-friendly governments and minimal welfare burdens.
But as the violent stand-off with “Red Shirt” protesters in Thailand's capital Bangkok highlights, Asia has its own share of problems too. Widening income differentials and the stranglehold of big business on the economy means trickle-down global capitalism has its limits. Now political risk is center-stage, as equity capital heads for exits.
In the booming gambling enclave of Macau, you might expect contentment, but 41 people were injured over the weekend when May Day clashes turned ugly. Over in the Philippines, with the election a week away, there are worries more violence may erupt which have already seen candidates murdered.
Thailand’s equity market bounced back strongly from the global crisis in 2009, with a total shareholder return (TSR) of 90.8% for the year against a 36% decline the year before. Ultra-lax monetary policies and massive public spending across the globe helped spur a quick turnaround from the worst global downturn since the Great Depression. With economic pundits forecasting that Asian economies will lead global growth over the next few years, led by emerging giants China and India, it seems logical that investors will shift their funds to Thai and Asian equity markets in search of higher yields.
Yet a glance through the 2009 Post/ AWR Lloyd-PYI Shareholder Scorecard shows that some sectors clearly benefited more than others. Home and office products led all sectors with a 267% gain in 2009, followed by agribusiness at 238% and property development at 132%. Lagging the chart was paper and printing materials, with a -1.3% TSR for 2009, professional services with a meager 4.5% gain, and property funds up 31%. The Shareholder Scorecard, published annually by the Bangkok Post and the AWR Lloyd-PYI group, is an analysis of the two factors that underlie investor returns — dividends and capital gains. Total shareholder returns (TSR) for 2009 are calculated by assuming that investors reinvest all cash received over the course of the year to determine a total return from one’s investment.