Asian countries may benefit from capital controls to help limit inflows that pose a risk to their economies and financial systems, according to the Asian Development Bank (ADB).
Authorities should consider “the full array of policy measures available in their toolkit,” the Manila-based lender said in a report published yesterday. The Asia Capital Markets Monitor recommended “temporary and targeted” restraints on incoming investment in addition to encouraging outflows.
“Volatile capital flows pose a significant risk, affecting both macroeconomic management and overall financial stability,” ADB vice president B.N. Lohani said in a speech in Seoul yesterday. “The return of capital flows is welcome. But large and sudden capital movements can put the sustainability of economic recovery at risk.”
The recommendation comes after the IMF last month voiced its support for taxes on capital inflows to help stem excessive appreciation in some Latin American currencies. A UN agency this month also touted similar measures, saying China, India, Singapore, Indonesia and South Korea are most at risk to short-term capital swings.
Demand for higher-yielding assets in Asia has helped drive gains of more than 25 percent for Indonesia’s rupiah and South Korea’s won since the start of December 2008, the month the US Federal Reserve cut its benchmark interest rate to near zero.
The MSCI Asia Pacific Index of equities has risen 40.7 percent over the same period while government bonds gained 22 percent, based on HSBC Holdings PLC’s composite index of 10 Asian markets.
Net private capital inflows to Asia’s developing economies are expected to be US$272.4 billion this year, compared with US$282.9 billion last year, ADB said, citing a forecast by the Washington-based Institute of International Finance. The amount of money pouring into the region may strengthen as central banks from India to Malaysia start raising borrowing costs to fight inflation, widening the interest-rate differential with the US, Europe and Japan, ADB said.
Taiwan in November last year banned foreigners from parking their money in time-deposit accounts to counter speculation on its currency that may hurt exports. Brazil the month before slapped a levy on foreign purchases of stocks and bonds in a bid to restrain the real’s appreciation.
ADB estimates that foreign funds hold about 20 percent of stocks by value in Asia’s emerging markets. They owned 22.3 percent of local-currency government bonds in Indonesia, 13.3 percent in Malaysia and 3.9 percent in Thailand as of March 31, the report said.
South Korean deputy finance minister Yim Jong-yong said at a forum in Seoul yesterday that emerging economies should move to rein a surge in inflows of foreign-currency capitals that may pose a risk to their economies.
“Globally coordinated measures to stem volatile capital market moves will end the vicious cycle of foreign-exchange reserves build-up and worsening global imbalances,” Yim said.
South Korea can consider measures to levy taxes on short-term foreign capital inflows and tighten the regulations on local financial firms’ short-term external borrowings, Park Cyn-young, principal economist at the ADB, told reporters in Seoul.
Stock markets in Taiwan, South Korea and India have so far this year attracted more than US$14 billion from abroad, following net inflows of US$57.7 billion last year, exchange data show.
Among the rows of vibrators, rubber torsos and leather harnesses at a Chinese sex toys exhibition in Shanghai this weekend, the beginnings of an artificial intelligence (AI)-driven shift in the industry quietly pulsed. China manufactures about 70 percent of the world’s sex toys, most of it the “hardware” on display at the fair — whether that be technicolor tentacled dildos or hyper-realistic personalized silicone dolls. Yet smart toys have been rising in popularity for some time. Many major European and US brands already offer tech-enhanced products that can enable long-distance love, monitor well-being and even bring people one step closer to
Malaysia’s leader yesterday announced plans to build a massive semiconductor design park, aiming to boost the Southeast Asian nation’s role in the global chip industry. A prominent player in the semiconductor industry for decades, Malaysia accounts for an estimated 13 percent of global back-end manufacturing, according to German tech giant Bosch. Now it wants to go beyond production and emerge as a chip design powerhouse too, Malaysian Prime Minister Anwar Ibrahim said. “I am pleased to announce the largest IC (integrated circuit) Design Park in Southeast Asia, that will house world-class anchor tenants and collaborate with global companies such as Arm [Holdings PLC],”
Sales in the retail, and food and beverage sectors last month continued to rise, increasing 0.7 percent and 13.6 percent respectively from a year earlier, setting record highs for the month of March, the Ministry of Economic Affairs said yesterday. Sales in the wholesale sector also grew last month by 4.6 annually, mainly due to the business opportunities for emerging applications related to artificial intelligence (AI) and high-performance computing technologies, the ministry said in a report. The ministry forecast that retail, and food and beverage sales this month would retain their growth momentum as the former would benefit from Tomb Sweeping Day
Thousands of parents in Singapore are furious after a Cordlife Group Ltd (康盛人生集團), a major operator of cord blood banks in Asia, irreparably damaged their children’s samples through improper handling, with some now pursuing legal action. The ongoing case, one of the worst to hit the largely untested industry, has renewed concerns over companies marketing themselves to anxious parents with mostly unproven assurances. This has implications across the region, given Cordlife’s operations in Hong Kong, Macau, Indonesia, the Philippines and India. The parents paid for years to have their infants’ cord blood stored, with the understanding that the stem cells they contained