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Asian leaders understand that sharp fluctuations of capital flows and currency volatility are a threat to their economies. APEC countries have been affected by slowing global growth, yet growth in the APEC region as a whole is more than double the global average, expected to be 6.3% this year and 6.6% next year.
Although Obama’s no-show during the meet in Bali was a disappointment, the Ministers’ main goal is improving the Asia-Pacific region’s resilience. With the backdrop of slowing global growth, there is a need to further multilateral trading and refrain from raising new barriers to investment or to trade.
The notable news is the overwhelming confidence amongst business leaders in the Asia-Pacific region to increase their investments in the coming years according to the PwC survey. Nearly seven out of 10 CEOs in the region are eyeing China, Indonesia and the US as their countries of investments in the next three to five years.
Kerry is left to apologise in Obama’s absence as the President is pre-occupied with the US domestic issue. This shutdown has impacted America’s stance in the region as well as possibly undermining the completion of the TPP trade pact by the end of the year. Malaysia’s PM Najib Razak said the deadline is tight and it may take longer than initiated.
The TPP is Obama’s initiation for job creation in the US and his focus on Asia. TPP talks involve 12 participating nations – the US, Brunei, Chile, Canada, New Zealand, Singapore, Mexico, Japan, Brunei, Vietnam, Peru and Malaysia. China is left out of the TPP, pursuing their own trade talks with 16 Asia-Pacific countries.
In the markets, China remains closed for the holidays and we should expect a rather quiet day. The Malaysian ringgit led gains in the region’s currency against the US dollar for the past five days. Given the US dollar weakness is expected to remain while the political theatrics are unresolved, we should expect emerging markets’ currencies to continue to recover.
For the rest of the week, the main calendar events are Singapore’s GDP and Bank Indonesia Reference Rate on 8 October, South Korea’s seven-day Repurchase Rate on 10 October, and China’s exports on 12 October.