South Korea’s government launched a plan on Tuesday to spend 114.1 trillion won (US$94.6 billion) on a “Green New Deal” to create jobs and help its economy recover from the impact of the coronavirus, President Moon Jae-in said on Tuesday.

The plan would move Asia’s fourth-largest economy away from its heavy reliance on fossil fuels and promote environmentally friendly industries powered by digital technologies, including electric and hydrogen cars, smart grids and telemedicine.

The new projects are expected to create some 1.9 million jobs through 2025, Moon said in a speech.

South Korea aimed to have 1.13 million electric vehicles and 200,000 hydrogen cars on the roads by 2025, up from 91,000 and 5,000 respectively at the end of 2019, he said, while the government would expand charging stations for the vehicles. “This module will also be integrated and accessible by related ministries and agencies to ensure a seamless flow of data and information,” said chief executive officer Datuk Azman Mahmud in a statement today.

The plan would promote remote medical services, a work-from-home policy for businesses and online schools based on fifth-generation (5G) wireless networks, and would include tax breaks for telecom providers installing the systems.

The government would also invest 24.3 trillion won to set up smart grids across the country to manage electricity use more efficiently, Moon said.

Source: Reuters

S. Korea to spend US$95b on green projects to boost economy

Samsung Electronics has been named the best brand in Asia in 2020 for the ninth year in a row, according to results from ‘Asia’s Top 1000 Brands’ annual survey conducted by Campaign Asia-Pacific in collaboration with Nielsen.

The survey explores consumer attitudes towards brands in 14 markets in Asia, namely China, Hong Kong, India, Indonesia, Japan, Malaysia, New Zealand, the Philippines, Singapore, South Korea, Taiwan, Thailand and Vietnam.

To ensure an accurate representation through this study, the report said the survey targets age, gender and monthly household income to establish a balanced survey landscape.

Asia’s Top 1000 Brands aggregates data from an online survey developed by Campaign Asia-Pacific and global information and insights provider Nielsen conducted between February 21 and March 19, 2020.

“Samsung is number one across five categories in this year’s Top 1000 Brands’ survey, including the strongest local brand, the brand with the best record on sustainability (new-to-2020 category), as well as the top brand in the mobile, TVs and smart home technology categories,” the report said.

The ranking – which aggregates views from across 15 major product categories including automotive, retail, food and beverage, and consumer electronics, was based on consumer insights and offers a clear measure of highly regarded brand names which are “top of mind” in the region.

“Categories and sub-categories change a bit each year. This year a new messaging service sub-category was added under the media & telecommunications category,” it added.

Source: Bernama

Samsung Electronics remains Asia’s Top Brand for 9th consecutive year

The global economy is expected to recover in the second half of 2020 (H2 2020) as more countries began to ease restrictions and lockdowns that were in place to control the spread of COVID-19, said MIDF Research.

The research firm said economic activities have started to increase worldwide, recovering from the sharp contraction in April 2020 following the COVID-19-triggered lockdowns.

“However, the balance of risk for the global economy remains on the downside as the recovery would take time to return to the pre-COVID-19 levels,” it said in its Weekly Money Review note for the week ended July 10, 2020.

It highlighted that downside risks to growth could come from another wave of coronavirus outbreak, escalation of geo-political risks and prolonged weakness in global demand.

Meanwhile, the research house noted that the International Monetary Fund (IMF) has slashed its global growth projection as the impact from the COVID-19 lockdowns on the global economy had been more severe that it had initially expected.

The global economy is expected to fall by 3.9 per cent in 2020 — worse than the Global Financial Crisis in 2008-2009.

The loss in global output is estimated to be more than US$12 trillion due to disruptions to the global supply chain and weak aggregate demand.

On the local front, MIDF Research expects Bank Negara Malaysia (BNM) to pause from further easing and assess the recovery in economic activities after the expected sharp contraction in growth during the second quarter this year.

“On the other hand, BNM has more room to cut should the economy weaken, as growth outlook could be constrained by persistent weakness in the labour market, or another wave of COVID-19 outbreak and slow recovery in the external demand,” it said.

On July 7, 2020, the central bank reduced the Overnight Policy Rate (OPR) by 25 basis points (bps) to 1.75 per cent to provide additional growth stimulus for Malaysia’s economy.

Cumulatively, BNM has reduced the OPR by 125 bps since January 2020 as economic activities slowed down, especially after the government imposed the Movement Control Order in response to the COVID-19 outbreak.

Meanwhile, MIDF Research said latest releases have pointed to more signs of recovery as more sectors have been allowed to restart their business activities.

The decline in the Industrial Production Index (IPI) eased to -22.1 per cent year-on-year (y-o-y) in May 2020 from -32.0 per cent y-o-y in April 2020, supported by the recovery in manufacturing output and electricity generation.

Additionally, consumption also picked up in May 2020 as distributive trade fell at slower pace of -23.8 per cent y-o-y against -36.6 per cent y-o-y in April 2020, while retail trade and sales of motor vehicles also recorded a strong rebound from the previous month.

Source: Bernama

Global economy expected to recover in H2 2020 as lockdowns ease

The US-China rivalry is shifting into new and unpredictable areas, engulfing everything from a popular video app to Hong Kong’s status as a global financial hub.

The latest tensions are overshadowing a trade agreement in January that was meant to draw a line under the trade war and be a boon for business. Instead, differences between both powers are deepening right at a time when the world economy is facing its worst crisis since the Great Depression.

This week alone, President Donald Trump said he was considering banning ByteDance Ltd’s short video app TikTok as retaliation against China over its handling of Covid-19. Some of his top advisers want the US to undermine the Hong Kong dollar’s peg to the greenback to punish China for recent moves to chip away at the former British colony’s political freedoms. There are even concerns over the visa status of hundreds of thousands of Chinese students who enroll at US colleges and universities each year.

China in turn has promised its own response, warning the US and others to stop interfering in Hong Kong and other issues.

“The Ice Age in relations is here to stay,” said Pauline Loong, managing director at research company Asia Analytica in Hong Kong and a veteran China watcher. “It will get much colder before there will be any thaw.”

The economic backdrop could hardly be more stark, with the International Monetary Fund estimating that by the end of this year 170 countries — almost 90% of the world — will have lower per capita income. That is a reversal from January, when it predicted 160 countries would end the year with bigger economies and positive per capita income growth.

The deepening divisions are forcing difficult decisions for global business. Facebook Inc, Google, and Twitter Inc — all of which are blocked in the mainland — are at risk of the same fate in Hong Kong.

Hours after Hong Kong announced sweeping new powers to police the internet on Monday night, those companies plus the likes of Microsoft Corp and Zoom Video Communications Inc all suspended requests for data from the Hong Kong government. It is not yet clear how the authorities will respond to that lack of compliance with local rules.

ByteDance’s TikTok, which has Chinese owners, announced it would pull its viral video app from the territory’s mobile stores altogether in the coming days. HSBC Holdings plc, which draws more than two-thirds of its pre-tax income from Hong Kong, slumped in Hong Kong trading today on fears it would lose out if the Trump administration moves ahead with any plan to punish banks in the city and destabilise the currency peg to the dollar.

The expectations are that threats and counter threats will only ratchet up further ahead of the US presidential election in November, with little prospect of a near-term reset.

“I don’t see any immediate circuit breaker,” said Fraser Howie, author of “Red Capitalism: The Fragile Financial Foundation of China’s Extraordinary Rise”. “Certainly not in the sense that there is a reset where everyone says ‘Weren’t we all being foolish? Let’s get back to being friends.’ I don’t see that coming any time soon.”

And it is not just the world’s two biggest economies being affected.

India said it will ban 59 of China’s largest apps after a deadly Himalayan border clash with Chinese troops that killed 20 Indian soldiers. China warned the UK it will face “consequences” if it chooses to be a “hostile partner” after it emerged the government is preparing to begin phasing out the use of Huawei Technologies Co equipment in the UK’s 5G telecommunications networks as soon as this year.

Since April, China has imposed crippling tariffs on Australia’s barley industry, halted beef imports from four meat plants and urged its tourists and students to avoid going to the nation due to the risk of attacks from racists. The government in Canberra had earlier called for an independent inquiry into the origins of Covid-19.

While economists said it is unlikely that the US would follow through on its threat against the Hong Kong dollar, given the risk of damage to US banks and companies, even the discussion of such a move is unnerving for confidence.

“It is a nuclear option, which could result in a financial crisis for Hong Kong, as well as considerable collateral damage for US banks and investors,” said Kevin Lai, chief economist for Asia excluding Japan at Daiwa Capital Markets. “It is not impossible, but we think it is unlikely to happen.”

The idea of striking against the Hong Kong dollar peg — perhaps by limiting the ability of Hong Kong banks to buy US dollars — has been raised as part of broader discussions among advisers to Secretary of State Michael Pompeo and has not been elevated to the senior levels of the White House, Bloomberg News reported.

“There is a fast-evolving realignment of forces happening,” said Alicia Garcia Herrero, chief Asia-Pacific economist with Natixis SA. “The spiraling threat will remain with us at least until the US election and, very likely, also afterwards. It is just a new paradigm.”

Source: Bloomberg

The US-China rivalry is broadening from trade to everything

Red Hat Inc, the world’s leading provider of open source solutions has announced a commissioned study results by Harvard Business Review Analytic Services, on behalf of Red Hat, exploring Asia Pacific’s (APAC) transformation and innovation trajectory against a global backdrop.

The study, titled ‘Understanding APAC’s Success in Digital Transformation’, surveyed 143 business executives from APAC from various industries including financial services, IT and manufacturing sectors.

The study findings state that Asian firms have latched on to digital transformation as a strategy, not just for growth but also survival, according to a statement.

The APAC difference in transformation effectiveness translates into important business benefits for the region’s firms, including helping them bring new products and services to market faster than their global counterparts.

The report’s highlights include 95 per cent of APAC executives said digital transformation gained in importance over the past 18 months; 80 per cent of APAC business leaders ranked cultural change and technology modernisation of equal importance for digital transformation; and 40 per cent of APAC executives are quickly developing and delivering new applications to market.

According to APAC executives, cultural change stood out as one of the three building blocks of modernisation, along with technology and business processes thus creating significant impediments to transformation success.

The study also revealed that companies looking to digitally transform successfully will need to support their cultural change initiatives with efforts to modernise their infrastructure and application architecture.

Source: Bernama

APAC companies prioritise cultural change, technology modernisation to accelerate digital transformation

Global semiconductor sales are forecast to increase 3.3% year-on –year in 2020 to US$426 bilion from US$412.3 billion a year, according to the World Semiconductor Trade Statistics (WSTS).

In a statement on its website on July 3, the U.S.-based Semiconductor Industry Association (SIA) which cited WSTS, also said worldwide sales of semiconductors were US$35.0 billion in May 2020, an increase of 5.8% from the May 2019 total of US$33.0 billion and 1.5% more than the April 2020 total of US$34.4 billion.

Monthly sales are compiled by WSTS and represent a three-month moving average.

SIA president and CEO John Neuffer said the global semiconductor market in May remained largely resistant to the widespread economic disruptions caused by the COVID-19 pandemic, but there is still significant uncertainty for the months ahead.

“The latest industry forecast projects modest annual growth for 2020, followed by more substantial sales increases in 2021,” he said.

Regionally, sales increased slightly on a month-to-month basis in China (5.8%), Japan (2.8%), and the Americas (1.9%), but decreased in Asia Pacific/All Other (-1.7%) and Europe (-6.5%).

On a year-to-year basis, sales increased significantly in the Americas (25.5%) and more modestly in China (4.9%), Asia Pacific/All Other (2.5%), and Japan (1.5%), but decreased in Europe (-12.9%).

Looking ahead, WSTS projects year-to-year increases in the Americas (12.8%) and Asia Pacific (2.6%), while decreases are projected for sales into Europe (-4.1%) and Japan (-4.4%) in 2020.

In 2021, the global market is projected to post moderate growth of 6.2%.

Source: The Edge Markets

Global semicon sales forecast to rise 3.3% y-o-y in 2020 to US$426b, says SIA

Samsung Electronics Co. reported better-than-expected profits after surging internet traffic propelled chip demand and gadget sales started recovering from the Covid-19 slump.

The world’s largest manufacturer of memory chips and smartphones posted operating profit of 8.1 trillion won ($6.8 billion) in the three months ended June, beating the 6.2 trillion won average of estimates. Sales for the quarter were 52 trillion won, according to preliminary results released Tuesday. The company didn’t provide net income or break out divisional performance, which it will do later this month when it releases final results.

The estimates include a one-time gain related to the display business. While the company didn’t offer details, some analysts estimated it could have recorded a gain of as much as 1 trillion won in compensation from Apple Inc. for fewer-than-promised display orders.

The South Korean company’s strong performance suggests the tech industry is climbing back from the Covid-19 pandemic, which has hammered the global economy but also accelerated a shift toward online activity such as video conferencing, web-based education and entertainment streaming.

​Although Samsung had warned of a profit slide in the second quarter due to plant and store closings, it managed to mitigate the fallout by cutting marketing expenses and selling TVs and monitors to people spending more time working and playing at home.

“Earnings remained brisk despite the weakness of offline-dependent smartphone sales,” Greg Roh, senior vice president at HMC Securities, said ahead of the announcement. “Going forward, the market will have more confidence in Samsung’s ability to stave off the next macro crisis.”

Source: Bloomberg

Samsung Earnings Buoyed by Chip Demand From Cloud Services

Private sector players operating in Asean can help further drive economic integration within the region, which has been impacted by the pandemic outbreak, by investing to restore supply chain connectivity.

“One of the impacts of the pandemic is the disruption of supply chains. This particular impact has shown that there is a need to really deepen our market integration.

“In my view, one important area where the private sector can assist is how to restore the supply chain connectivity in the region,” said Asean deputy secretary-general for the Asean Economic Community (AEC) Dr Alladin D Rillo, during the CIMB Asean Research Institute’s or CARI’s webinar themed ‘How Asean Bounces Back’.

He said there are two possibilities in which this could materialise. One is in terms of private players’ ability to enhance information sharing among them within the supply chain.

“I think this is very important. As you know, private sector players are one of the key players in the supply chain and therefore the ability to exchange information among the different players is critical in order to be able to identify which part of the supply chain is at risk,” he said.

Another way to do so is by investing more in areas like big data and artificial intelligence. “These areas are the key areas the private sector can invest in, in order to restore supply chain connectivity,” Rillo said.

He added that the recovery from Covid-19 would require more robust support from the market, and this is where the private sector can play a role.

While the pandemic outbreak has affected market integration in the region, “this does not mean we need to stop”, he said, adding market integration is a work in progress.

“These current difficulties also provide greater justification to ensure greater market integration that the AEC is working towards,” he said.

Established in 2015 to drive regional economic integration, the AEC came up with the AEC Blueprint 2025 — which has been adopted by ASEAN leaders at the 27th ASEAN Summit — that sets out strategic measures to achieve the vision of having an AEC by 2025 that is highly integrated and cohesive, competitive, innovative and dynamic, with enhanced connectivity and sectoral cooperation.

Source: The Edge Markets

Private sector investment in supply chain restoration can deepen economic integration, says AEC

The Covid-19 crisis is a reminder for Asean member states to modernise their economy and fully realise the potential of the intra-Asean market, said Asean secretary-general Datuk Lim Jock Hoi.

“It is quite evident that we need this in order to reinvigorate our economic growth” said Lim in a webinar organised by CIMB Asean Research Institute (CARI) entitled “How Can Asean Bounce Back”.

Lim added that Asean must forge ahead with the digital transformation agenda of its economy and business environment.

Stressing that digital transformation is the next driver of the region’s economic growth, Lim said that by 2025, this sector could add US$1 trillion (RM4.29 trillion) to Asean’s gross domestic product (GDP).

Lim also said that the ability of Asean to recover and thrive in a post-Covid-19 world is also contingent on human capital development.

He said the development of Asean nations’ human capital must be inclusive, and expand opportunities to all segments of society, especially in relation to vulnerable goods.

“As we look forward to a post-pandemic world, we need to address the region’s long-term resilience and promote sustainability in more aspects.

“There is a need to rethink our existing approaches to sustainability, which cannot be tackled from the environment perspective alone, but also from the perspective of financing, production, consumption, energy standards and so on.

“This an opportunity for us to push our agenda for sustainability in all aspects,” Lim added.

The secretary-general said it is invertible that Asean needs to play a more proactive role in the global arena.

“Asean shall continue to advance the interests and priorities of its people, while contributing to an open, rule-based, non-discriminatory and multilateral system, which best benefits small- and medium-sized economies.

“Asean shall participate in relevant reforms efforts, and in the multilateral system remains relevant, fair and inclusive,” he added.

Source: The Edge Markets

Modernise market and realise greater intra-regional trade, Asean told

The digital economy will be a vital part of Southeast Asia’s recovery plan from Covid-19, said the Association of Southeast Asian Nations (Asean) secretary-general Datuk Lim Jock Hoi.

“The digital economy is critical. As you know, the pandemic has forced a lot of people to use digital technology, and it is very refreshing to see that every one of us has adapted,” he said during CIMB Asean Research Institute’s (CARI) webinar titled “How Can ASEAN Bounce Back: Can the ASEAN Economic Community Retain its Vision in a Post-Pandemic World”.

“In future, the economic driver will very much be in this area. We are looking at how best to use this as part of our post-pandemic recovery plan,” he added.

“Of course, there are other areas where I think we are looking at as part and parcel to help the micro, small and medium enterprises (MSMEs), especially in the informal sector, in terms of how to revive them so that they can have their livelihoods back after the pandemic,” he added.

According to him, work on a recovery plan between the countries in the bloc are underway.

“As you know, Asean leaders also agree to have this comprehensive recovery plan, which is a holistic, pragmatic, sustainable and resilient,” he said.

He added that the regional supranational organisation is addressing the issue with a “cross-sector of bodies and cross-sector of pillars”.

Lim said he hoped that the plan would contribute to the bloc’s economic recovery, not only in terms of lives but also in terms of the socio-economic development and advancement of the region.

Source: The Edge Markets

Asean sec-gen stresses importance of digital technology in regional post-pandemic recovery

Artificial intelligence (AI) has the potential of contributing as much as US$15.7 trillion to the global economy by 2030, an analyst said today.

This is more than the combined gross domestic product (GDP) of China and India currently, said Stephen Jue, portfolio manager at Allianz Global Investors.

Jue sees investment opportunities across a broad spectrum of technologies and sectors embracing the disruptive power of AI.

“The adoption of AI is expected to boost profits in many industries through efficiencies over the long term, spanning from education, healthcare, farming to logistics,” he said at a technology and AI themed virtual investment forum today organised by RHB Asset Management.

Tan Jee Hoon, chief investment officer of Asia-Pacific equities at RHB Asset Management, told the forum that prospects for companies that are technology and internet based and AI enabled would continue to get stronger.

“This comes especially when technology adoptions rates were seen to be scaled up significantly in recent days, on the backdrop of the pandemic outbreak, which has changed behavioural and consumption patterns,” he said.

Tan spoke of how the tech-giants of the internet ecosystem have played a prominent role in one’s daily life spanning from work, live and play.

He used examples of US-based tech players like Google, Facebook and Amazon as well as China-based Tencent, Ali Baba and Baidu.

These tech giants have been the leading outperformers in the stock market’s recent recovery, he noted.

Addressing current valuations on tech companies, Allianz’s Jue disagreed with the notion of bubble valuations seen on the tech giants.

“Post the dot-com bust era, tech companies are trading at 15 to 20 times price-earnings range for a number of years. Only more recently, the valuations are slightly higher at 23 times.

“These are bigger companies and [with] a sustainable business model, ‘software as a service’ have been proven out as profitable cash flow models in subscription terms, and there are more real earnings growth support now,” he added.

While most shares are seen to be trading higher with the help of massive stock market liquidity, RHB’s Tan thinks that the tech sector deserve a more positive re-rating than other sectors.

“I believe post-Covid winners will not be across the board as only certain sectors will be able to benefit the post-Covid era, and that sector happens to be in the tech space,” he said.

In view of the growing opportunity in tech transformation in the new normal, RHB Asset Management has launched two funds with long-term capital appreciation objectives that are related to the AI theme.

The first is RHB Global Artificial Intelligence Fund, which invests in a basket of companies whose business will benefit through the evolution of AI.

The second is RHB Big Cap China Enterprise Fund, an open-ended unit trust that invests in securities of China-based companies with high growth potential, where 40% of the fund is invested in the technology sector.

Source: The Edge Markets

AI could contribute over US$15 trillion to global economy by 2030 — analyst

A recent top-level meeting on deepening reform stressed on China advancing the integrated development of new-generation information technology and manufacturing, and accelerating the development of industrial internet and the fundamental transformation of the mode of manufacturing to promote the sector’s digitalized, network-oriented and intelligent development.

The world is entering an intelligent digitalized age in which new-generation information and communications technologies represented by 5G, big data and artificial intelligence have provided new impetus for global development.

Industrial internet is central to the fourth industrial revolution while integrated and innovative development of 5G and industrial internet will promote the transformation of manufacturing toward digitalized, network-oriented and intelligent application of information technology.

Being the world’s largest manufacturer, China’s manufacturing enjoys efficiency, quality and cost advantages. However, as land and labor costs continue to rise, some labor-intensive low-end manufacturing enterprises have moved out of China.

In order to get rid of labor constraints, enhance manufacturing competitiveness and consolidate its advantages, China should raise the level of the sector’s digitalized, network-oriented and development as part of its supply-side structural reform.

China is accelerating the pace of “new infrastructure” construction for digitalized transformation. By the end of 2020, all of the country’s prefecture-level cities are expected to be covered by the 5G network, providing a basis for promoting integrated development of “5G plus” vertical industries. Once that happens, it is necessary for China to vigorously promote the development of industrial internet and accelerate integrated application of vertical industries to give full play to their value.

According to the fourth national economic census released in 2019, only 45.1 percent of industrial enterprises in China use the internet or internal networks in their production, which means that more than half of industrial enterprises are still in the primary stage of informatization and yet to realize digitalized and network-oriented development.

Intelligent development is becoming popular in highly competitive fields such as electronics and other manufacturing industries. The popularization of informatization is crucial for promoting the integrated development of 5G and manufacturing, but it still remains a long and arduous task.

Experimental application shows that enterprises are satisfied with reduced costs and increased efficiency brought by industrial internet under global economic downward pressures. There may be input costs in the short term, but it will sharpen their international competitiveness in the long run. As a country with manufacturing advantages, China should speed up the sector’s digitalized, network-oriented and intelligent transformation to consolidate and raise its competitiveness.

Source: China Daily

Time to speed up digitalization process

ASEAN post-pandemic recovery is an opportunity for the region to recalibrate its growth trajectory to become more resilient, digitally-enabled, inclusive, and sustainable, said the regional grouping’s secretary-general Datuk Lim Jock Hoi.

COVID-19 had an unprecedented impact on health and socio-economic impact in the region but also presented the opportunity for the region to reassess its path, he said.

Lim also stressed the significance of the region’s early commitment to cooperate instead of turning inward amid the coronavirus pandemic.

“ASEAN will continue to work together, including with external partners and partner institutions. This demonstrates ASEAN’s commitment to multilateral cooperation to effectively address the expansive implications of this unprecedented threat,” he said said during a virtual exclusive dialogue organised by CIMB ASEAN Research Institute (CARI) today.

The session, part of the CARI Briefings: COVID-19 Economic Recovery Plan Series, was titled “How Can ASEAN Bounce Back: Can the ASEAN Economic Community Retain its Vision in a Post-Pandemic World?”

It was moderated by CARI chairman Tan Sri Dr Munir Majid.

The opportunity to recalibrate growth comes at the midway point of the second ASEAN Economic Community Blueprint 2025 as ASEAN goes through the mid-term review this year to evaluate its past progress and plan for the future.

The region is also at a critical period given the start of the development of a consolidated strategy for the Fourth Industrial Revolution and the final preparation stage of the Regional Comprehensive Economic Partnership towards its signing.

Lim said the coordination for reopening and post-pandemic recovery was critical given ASEAN’s high level of economic integration and interconnectedness.

“The private sector will play an integral role in these efforts to restore employment, business confidence, and in working towards a swift and strong recovery,” he added.

Source: Bernama

ASEAN post-pandemic recovery an opportunity to recalibrate economy

Asia’s factory pain showed signs of easing in June, as a rebound in China’s activity offered some hope the region may have passed the worst of the devastation caused by the coronavirus pandemic.

But sluggish global demand and fears of a second wave of infections will tame any optimism on the outlook and keep pressure on policymakers to support their ailing economies.

China’s factory activity grew at a faster clip in June after the government lifted coronavirus lockdown measures, a private sector survey showed on Wednesday.

Manufacturing activity also expanded in Vietnam and Malaysia, pointing to a slow but steady recovery ahead.

Japan and South Korea continued to see manufacturing activity shrink, underscoring the heavy blow the pandemic dealt to their export-reliant economies, although the pace of their declines slowed.

“The chance of a V-shape recovery in the manufacturing sector appears slim at this stage,” said Joe Hayes, economist at IHS Markit, which compiles the survey.

“We’re still awaiting signs of meaningful improvement in Japan’s manufacturing sector, with the PMI for June failing to stage a substantial recovery.”

China’s Caixin/Markit Manufacturing Purchasing Managers’ Index (PMI) rose to 51.2 in June from 50.7 in May, marking the highest reading since December 2019. That followed a similarly upbeat reading from the Chinese government’s own PMI on Tuesday.

Vietnam and Malaysia also saw their PMIs crawl back above the 50-mark separating growth from contraction, a welcome sign for policymakers struggling to combat the pandemic’s fallout.

But analysts expect any recovery in the region to be slow.

While China’s export orders shrank at a slower pace, its employment contraction worsened, the PMI showed, underscoring the fragile recovery in the world’s second-largest economy.

“Overall manufacturing demand recovered at a fast clip, but overseas demand remained a drag,” said Wang Zhe, senior economist at Caixin Insight Group.

Japan’s PMI rose to a seasonally adjusted 40.1 in June, while South Korea’s PMI ticked up to 43.4 – both remaining far below the boom-or-bust threshold of 50.

Separately, a Bank of Japan survey showed big manufacturers’ confidence sinking to levels last seen during the 2009 global financial crisis, reinforcing expectations the country was sinking deeper into recession.

“If demand doesn’t rebound fast enough, companies will have to shed jobs,” said Shinichiro Kobayashi, senior economist at Mitsubishi UFJ Research and Consulting. “That will delay Japan’s economic recovery, which could end up in a L-shape.”

Source: Reuters

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