Developing Asian nations must carefully manage a massive inflow of foreign capital and avoid remedies that could create destabilizing “distortions,” the Asian Development Bank (ADB) chief warned yesterday.
ADB president Haruhiko Kuroda told Asian leaders at a summit in the Vietnamese capital, Hanoi, that capital flows are one of two risks that regional economies face as they rebound from the last global downturn.
His comments came shortly before the US Federal Reserve is expected to announce it will go into a second round of quantitative easing, injecting more money into the banking system to further stimulate the world’s biggest economy.
The first risk is if the recovery in the developed economies falters, Kuroda told presidents and prime ministers as well as US Secretary of State Hillary Clinton and the Russian foreign minister.
“The second risk is capital flows, which could complicate macroeconomic management,” Kuroda said in a prepared speech made available to journalists. “We must be prepared.”
Referring to Asian economies outpacing growth in the developed world, Kuroda said: “Faster growth and higher yields can draw excessive — and potentially volatile — capital flows into the region.”
“Authorities are watching asset prices and exchange rates carefully, with several beginning to use well-targeted capital controls to limit speculation,” he said. “Care must be taken, however, not to create distortions.”
According to the Washington-based Institute of International Finance, net private capital flows to emerging economies are projected to reach US$825 billion this year, or over US$2 billion a day, up from US$581 billion last year.
The massive inflow has been a key factor pushing Asian currencies higher, which have made their exports more expensive on the global market.
It has also led to steep gains in stocks and property prices, stoking fears of “bubbles,” which could later burst if the money is withdrawn quickly, and prompted individual central banks to impose capital controls and other measures to cool down their markets.
China’s economic planning agency yesterday outlined details of measures aimed at boosting the economy, but refrained from major spending initiatives. The piecemeal nature of the plans announced yesterday appeared to disappoint investors who were hoping for bolder moves, and the Shanghai Composite Index gave up a 10 percent initial gain as markets reopened after a weeklong holiday to end 4.59 percent higher, while Hong Kong’s Hang Seng Index dived 9.41 percent. Chinese National Development and Reform Commission Chairman Zheng Shanjie (鄭珊潔) said the government would frontload 100 billion yuan (US$14.2 billion) in spending from the government’s budget for next year in addition
Advanced Micro Devices Inc (AMD) suffered its biggest stock decline in more than a month after the company unveiled new artificial intelligence (AI) chips, but did not provide hoped-for information on customers or financial performance. The stock slid 4 percent to US$164.18 on Thursday, the biggest single-day drop since Sept. 3. Shares of the company remain up 11 percent this year. AMD has emerged as the biggest contender to Nvidia Corp in the lucrative market of AI processors. The company’s latest chips would exceed some capabilities of its rival, AMD chief executive officer Lisa Su (蘇姿丰) said at an event hosted by
Sales RecORD: Hon Hai’s consolidated sales rose by about 20 percent last quarter, while Largan, another Apple supplier, saw quarterly sales increase by 17 percent IPhone assembler Hon Hai Precision Industry Co (鴻海精密) on Saturday reported its highest-ever quarterly sales for the third quarter on the back of solid global demand for artificial intelligence (AI) servers. Hon Hai, also known as Foxconn Technology Group (富士康科技集團) globally, said it posted NT$1.85 trillion (US$57.93 billion) in consolidated sales in the July-to-September quarter, up 19.46 percent from the previous quarter and up 20.15 percent from a year earlier. The figure beat the previous third-quarter high of NT$1.74 trillion recorded in 2022, company data showed. Due to rising demand for AI, Hon Hai said its cloud and networking division enjoyed strong sales
TECH JUGGERNAUT: TSMC shares have more than doubled since ChatGPT’s launch in late 2022, as demand for cutting-edge artificial intelligence chips remains high Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) yesterday posted a better-than-expected 39 percent rise in quarterly revenue, assuaging concerns that artificial intelligence (AI) hardware spending is beginning to taper off. The main chipmaker for Nvidia Corp and Apple Inc reported third-quarter sales of NT$759.69 billion (US$23.6 billion), compared with the average analyst projection of NT$748 billion. For last month alone, TSMC reported revenue jumped 39.6 percent year-on-year to NT$251.87 billion. Taiwan’s largest company is to disclose its full third-quarter earnings on Thursday next week and update its outlook. Hsinchu-based TSMC produces the cutting-edge chips needed to train AI. The company now makes more
RSS