Introduction
Few will deny that we now live and work in a global economy, one in which regional and national markets in the United States, China, and the European Union are increasingly dependent on each other. The connection goes beyond competition in the markets. Virtually every country in the world is directly or indirectly influenced by the decisions of national banks, by government policies and strategies, by regional conflicts and security, by changing demographic trends, and increasingly, by the decisions of large companies that operate across national borders within this new environment.
This global connection has effectively created “butterfly” outcomes in which policy decisions, government strategies, and large scale commercial activities create ripples across the world via the internet, streaming video, and social media. A recent example was the decision by the U.S. Federal Reserve Bank on December 14, 2022 to raise its bank rate by half a percentage point. This resulted the next day in identical increases by the European Central Bank, the Bank of England, the Swiss National Bank, and the Hong Kong Monetary Authority. Others, such as Norway’s Norges Bank, followed with a smaller rate increase a few days later.
Connected by Inflation
The U.S. Federal Bank has been attempting to limit price inflation brought on by, among many causes, disruptions in the supply chain to deliver goods from international suppliers. This was affected by a slowdown in ocean ship traffic and higher fuel costs, which was, in turn, affected by rising energy prices due to the war in Ukraine, and disruptions caused by the global covid pandemic. “Blue Chip” multi-national companies, responding to the scarcity of goods, higher costs of borrowing from banks, and lower revenue, began raising prices. Stock market values have since plummeted by more than 40%, and several countries fear a recession in 2023. As a result, the cumulative influence of these factors since early 2020 has contributed to consumer anxiety and lower confidence in many regional economies, especially among stock market investors.
More than History – The Realities of Market Economies in a Global Recovery
There may be a way out of this quagmire. Recent history suggests that conditions are often fluid, and economic declines, in particular, are cyclical. But let’s face it. The study of history has its limits, and does not address our short term needs or anxieties. Preparing for a recovery will require new ways of looking at our “globalized” world that are more economically relevant.
Looking to the 21st century, and at what consumers and retirees can learn from different regions and about companies that currently drive the global economy, will require more reliable and accurate information to make financial decisions. Given these realities, it is necessary to include China and the countries of Southeast Asia in any assessment of mutually beneficial opportunities in what will be an “Asia Future”.
Asia Future – Insights into Global Investment Strategies
This project traces the influence of Asia in a globalized future that will touch every country. It will begin by incorporating research and data collected in Macau and Hong Kong over the last decade, and using it for context to discuss the current situation in China through close observations of both cities. I chose this method for several reasons.
The Asian continent is so vast and diverse that anyone who is interested in studying it often learns to focus on representative areas to get a better sense of economic, social, and cultural developments. My interest in China, for example, has been filtered through the lens of Macau and Hong Kong, two “Special Administrative Regions” (SAR) that were given back to China in 1999 and 1997, respectively. In the course of my studies, I realized that each city, due to their development as culturally diverse commercial “Gateways” in different periods, may offer important clues in the present day about the kinds of investments that will likely prosper as the global economy recovers.
Investment Strategies
In light of the current recession, Hong Kong, formerly the 3rd largest banking center in the world, and Macau, formerly a global leader in casino gambling and entertainment, are now using compatible strategies as a method of recovery in 2023 and beyond. Like most regions around the world, both cities face social and political challenges. But moving forward, Macau’s attempted diversification using new technology applications under the Greater Bay Area (GBA) initiative, and Hong Kong’s expected re-emergence within the GBA as a financial hub linking China with the United States and the E.U., offer real time case studies that can be highlighted and analyzed.
The goal is not to suggest where or what to invest in China. Instead, it is to analyze where Chinese investment capital is moving as the Pearl River region recovers under the GBA, to assess how successful Macau’s and Hong Kong’s strategies are, and to propose what their respective actions suggest for investing in companies that serve global markets. In the process, we will gain insights into where the global economy may be headed in two critical sectors: technology and finance.
Here’s what to expect in later articles:
- Observations on current developments in Macau and Hong Kong related to their recoveries
- Patterns and Tendencies that indicate capital concentrations and future trends
- Notes on personal Investment Strategies and Tracking a Stock Index to gauge progress
- Highlights on specific companies, industry groups, and economic sectors that will benefit
The next few articles will analyze China’s Greater Bay Area project, and the roles anticipated for Macau and Hong Kong in a global recovery. Stay tuned.
