Next Week in Asia is the Asia House weekly briefing on key trade, investment, and policy issues to watch across Asia in the week ahead, with analysis and views from our Research and Advisory team.
24 June 2021
US-China trade expected to remain resilient, despite tensions
US trade data will be released in the coming week, with detailed country splits providing an indication of whether recent trends – including an uptrend in US-China trade – are enduring. Despite ongoing political tensions, US exports to China continue to show resilience. That said, the Biden administration’s strategy of confrontation, cooperation and competition with China seems set to continue alongside a broader US trade policy prioritising American workers and manufacturing. In the week ahead, the Biden administration is also likely to seek congressional renewal of the US Trade Promotion Authority, which typically precedes and enables new trade agreements for the US. Any changes to the legislation might include specific clarifications giving congress more power, including around trade agreements.
Risks to India’s growth outlook likely to emerge
Until the recent resurgence of COVID-19, India was expected to grow 12.5 per cent annually in 2021 by the International Monetary Fund – the fastest economic rebound in the world, including in comparison to China’s growth (8.6 per cent) and to that of the other BRICS economies. This estimate is likely to be revised downward given risks around India’s long-term economic scarring from the crisis, and its external debt. Both risk factors are likely to be evident in its upcoming trade and debt data. However, given India’s relatively high level of trade openness and its size, much of India’s growth will come from its investment and trading relationships. Recently announced economic stimulus will also provide crucial support to its domestic economy. Prioritising companies’ damaged balance sheets, infrastructure finance, and support for rural development and health will be of particular importance.
Dr Krishnamurthy Subramanian, the Chief Economic Adviser to the Government of India, will brief Asia House Corporate Members on Thursday 8 July. Find out more.
Asian business prospects set to remain strong
Japan’s closely watched Tankan survey, a strong indicator for actual investment in Japan, will be released next week. It is likely to show continued strength as the Tokyo Olympics commence next month. In 2021, Asia’s economies are expected to show the strongest growth prospects, particularly compared with some of the G7 economies. And yet, economic readings will look bumpy for some time, due in part to lockdown restrictions and regional COVID outbreaks, such as those in several Chinese ports. In the week ahead, China’s closely-watched purchasing managers’ indices, as well as industrial production figures from South Korea and Japan, will continue to show underlying weakness.
Israel’s Foreign Minister to visit UAE in historic trip
Israel’s new Foreign Minister, Yair Lapid, will visit the United Arab Emirates (UAE) on 29 June, marking the first official visit ever by an Israeli cabinet minister. The trip represents a key opportunity for Israel-UAE relations to become more constructive and to be managed in a pragmatic manner. Choosing the UAE as the destination for Minister Lapid’s first overseas trip highlights the importance that Israel’s new government is placing on normalisation with its neighbours. The visit also comes at a time of growing trade links: Israeli figures for merchandise trade with the UAE show rapid growth between the start of 2020 and 2021. In the past, previous UAE-Israel investment deals have focused on the energy, manufacturing, water, space, healthcare, and Agri-Tech sectors. The UAE will also want to use Lapid’s visit to publicise openness to Israeli tourists.
Abu Dhabi’s first IPO since 2017 to launch
The UAE satellite operator, Yahsat, will mark the first public offering on the Abu Dhabi Securities Exchange (ADX) since 2017. The UAE’s sovereign wealth fund Mubadala, which owns Yahsat, is due to sell at least 30 per cent of the company. The offer period will begin on 27 June with a price range announced on the same day. Following this initial period, the IPO itself is currently planned to begin on 14 July. The coming week’s news is important in that it reflects a growing trend within the GCC economies whereby sovereign wealth funds have become more activist and transparent in their investment strategies. The upcoming IPO also reflects the UAE’s long-term economic strategy to improve its investment climate and to attract greater inward investment. Under its ‘ADX One’ strategy, the exchange has been pushing to double its market capitalisation by 2024, including through the launch of a derivatives market, scheduled for late 2021.
Read the Asia House research note on the ongoing economic and social reforms in the UAE.
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