'Bali blasts to have small impact on investors in Asia'
'Bali blasts to have small impact on investors in Asia'
Agence France-Presse, Singapore
The deadly bomb blasts that hit the Indonesian island resort of Bali more than a week ago will not weigh heavily on investors when they look at Asia, a top Morgan Stanley strategist said Wednesday.
Instead, investors are more concerned about the region's fortunes which are still tied to the fate of the U.S. economy and the current cycle of deflation afflicting most Asian economies, chief investment strategist Byron Wien said.
"I think we don't view Bali as a key event," Wien told reporters on the sidelines of an economic forum hosted by the U.S. investment house.
While the Bali terror attacks, which investigators say bear the hallmarks of the extremist group Jemaah Islamiyah, is "an important event" in threats posed by terrorists, investors are preoccupied with other issues, Wien said.
"They are worried that Asia is dependent on the U.S.. They have doubts about U.S. growth," said Wien.
"They are also worried that most of the countries in Asia are (in a) deflationary period."
The Oct. 12 Bali car bomb blast at a popular tourist strip killed more than 190, most of them foreigners, and left hundreds wounded.
No one has claimed responsibility for the attack although foreign governments have focused on al-Qaeda and its regional ally, the Jemaah Islamiyah.
Morgan Stanley chief economist Stephen Roach said China's growing economic prowess would inevitably bring changes to the region and its neighbors have no alternatives but to adapt to it.
"China is becoming a powerful force and the region is coming to grips with it," said Roach.
"China changes everything in the region but when you have dynamic small city state economies like Singapore and Hong Kong, they are able to change. They need to change," he said.
"I think both Hong Kong and Singapore will adapt accordingly."
The rest of the world, Asia included, is very much vulnerable to the issues confronting the U.S. economy, most of which trace their roots to the dot.com era in the 1990s, Roach said.
"Many of the excesses and imbalances that built up during the bubble are still with us today," said Roach.
"Until they are purged, I really do believe the U.S. is going to have a hard time establishing sustainable and a vigorous economic recovery," he said.
It will be detrimental for Asia and other parts of the world, Europe included, if U.S. policymakers fail to address these lingering economic defects from the 1990s, said Roach.
The U.S. is still the lynchpin of the global economy and that leaves the rest of the world at its mercy unless an alternative growth engine emerges, he said.
"Lacking an alternative engine of growth, then America's troubles will be the world's troubles and the world recovery will be anemic," Roach said.
Since 1995, the U.S. accounted for an "astonishing" 64 percent of the growth posted in the global economy, Roach said.
"It's double America's share in the world GDP (gross domestic product)," he said.
"And this U.S.-centric nature of the world of course means when America booms, so does the rest of the world and when America sputters then the negative impact of that actually gets compounded in externally dependent places such as Asia or even Europe," Roach said.