Views with Acuity: Insights to Build Resilience (May 07)
One step at a time
After months of doom and gloom, we finally have some reasonably good news. Countries around the world are taking concrete steps to reopen their economies.
In that light, it’s important to remember how well you and I, who can work remotely have it. But, do spare a thought for those who aren’t in the same (relatively) fortunate situation. If for no other reason, do it out of self interest.
Here’s why. If 2008 created the first-born of modern-day populism, the COVID-19 crisis just gave birth to its tenacious sibling. The phrase “we’re all in this together” isn’t just empty rhetoric. A delicate balance will need to be struck between the pandemic and livelihoods in the coming months. For stability’s sake, pragmatism needs to be favored over dogma and ideology.
Think about it: when you are in a hole, you first get out, however you can. Then you help others, or figure out if you are hurt before thinking about how to fill the hole. We have just crawled out.
Stay safe, stay positive.
P.S. If you find these insights useful, please sign up so these insights can be sent to your inbox directly.
Country Acuity Advisors - Insights
There is light (and life) at the end of the tunnel. Outside of China, we are seeing countries as diverse as Germany and India taking steps to reopen their economies. Contrary to the doomsday scenarios, life is resuming. People are going out, buying stuff, eating out and eager to meet and talk in person. Business activity will pick up, slowly, but it will pick up. Risks remain, of course: these include premature openings before the spread is contained, mutation of the virus and, especially, a second wave. Some governments are taking calculated risks to strike a balance between the pandemic, livelihoods and feeding people. Many of us will need to take calculated risks too.
Let's just stay home then, shall we? Two months at home and the next financial 'innovation' is taking hold: cutting real estate expenses. Co-working is old news. The future is virtual. Technology has matured, to be sure. It allows most white-collar work to be done remotely, and flexible work arrangements can boost morale. But it's important for leaders to remember the drawbacks and limitations of working from home, too. For instance, most of us are clamoring for the lockdown to end so we can meet people and live "normal" lives. So be wary of those who say the future of work is exclusively virtual. Remember our dismal track record of being treated like optimized rational workers. Whatever your plans, focusing on human contact will be an essential and competitive part of thriving and resilient organization.
Distrust serves a purpose: Cracks in the US-China Relations. We’re in the early stages of an unfortunate great-power rivalry renaissance. Some very genuine tensions and concerns that were simmering for a while are now laid bare. Leaders in both countries appear resigned to a more fraught relationship. While many tout economic and financial rationale, it’s easy to forget political rationale, especially that which serves domestic audiences. Others such as Australia or those in the EU, have started to talk tough on China. But economies in southeast Asia and the rest of Asia are presented with tougher choices about if where to align. For businesses who are hoping that economic rationale will win the day, it is wise to plan ahead now.
End of Emerging Markets?! Weren’t emerging markets going to be the future of everything? Now, opinion pieces about the coming collapse of emerging markets are in vogue. Before making broad brush statements, it is worthwhile to remind ourselves of some basics. Near term economic growth will sharply contract, but will it derail the long-term outlook? Population, investments and how efficiently the economy and country are run - productivity, loosely put - are the key ingredients at play here. The investments governments and businesses make today will lay foundations for future prosperity, even one that is more sustainable. Geopolitics and populism will play a role, whether you like it or not, by re-allocating investments and economic activity. It’s time to stop writing emerging market obituaries, and start looking more closely about where opportunities lie.
Let us know how we can help you. We offer risk advisory, bespoke analysis, and scenario planning, including war gaming of investment decisions in emerging and frontier Asia.
Three Things To Read this Week to Build Resilience
What Asian and Pacific Countries Can Teach the World About How to—and How Not to—Reopen Our Economies. It’s early morning on Shanghai’s West Bund, and the lawns of the waterfront area are filled with picnickers savoring the annual cherry-blossom bloom. Parents push strollers through carpets of flowers while students sprawled on the grass share bottles of chilled cava. After three months of strict stay-at-home orders because of the COVID-19 pandemic, residents of China’s biggest city have re-emerged blinking into the light. (Time, April 30, Free to read)
Debt Monetization Creeps Closer to Global Investors’ Wary Relief. A massive shift that’s starting to play out in Asia’s bond markets is finding cautious support from some of the world’s largest investors. From Jakarta to Wellington, policy makers are challenging taboos and creeping closer toward the monetization of government debt, breaking new ground after the U.S. and Europe took the lead in crisis management a decade ago. Global bond funds say the bold action from the region’s central banks can’t come soon enough, even as they worry about the longer-term risks, particularly in emerging markets. (Bloomberg, April 28 , Free to read)
The End of the US-China Relationship. It didn’t have to end this way, but the die is now cast. After 48 years of painstaking progress, a major rupture of the US-China relationship is at hand. This is a tragic outcome for both sides – and for the world. From an unnecessary trade war to an increasingly desperate coronavirus war, two angry countries are trapped in a blame game with no easy way out. (Project Syndicate, April 27 Free to read)
COVID-19 Grants, loans, & other forms of assistance for companies in Asia-Pac - Asia Pacific MSME Trade Coalition (AMTC)
Global Protests Tracker (including COVID-19 protests) - Carnegie Endowment for Peace
Country by country policy responses to COVID-19 - Compiled by the IMF
Coronavirus: the latest - Financial Times tracker (Free to read)