Please see below selected recent intelligence about the Asia Pacific region. This is a synthesis of major recent developments at competitors, business schools, thinktanks, media, commentators, and other key influencers in our external environment.
Asia-Pacific is a region of huge diversity, not only culturally and geographically, but economically too. Japan is a member of the G7 and a world leader in automotive and technology. Singapore competes with London and New York as a global financial centre. Australia and New Zealand are sometimes treated as a region in their own right due to both geography and culture - it takes over 12 hours to fly from Delhi to Sydney and history ties them more to the UK and US - but they are increasingly connected to Asia through trade.
- ASEAN Connections: how mega-regional trade and investment initiatives in Asia will shape business strategy in ASEAN and beyond - The Economist
- Outlook for Key Emerging Asian Markets - Economist Intelligence Unit
- Please note that, due to the disproportionately high number of stories involving China, we cover these in a separate blog post - please see On China's economic uncertainty.
- The Australian economy grew 1.1 per cent quarter-on-quarter in the first three months of the year, trumping expectations. That took the annual rate to 3.1 per cent, compared to expectations of 2.8 per cent.
- On the global economic radar, Bangladesh has long been overshadowed by its larger neighbour in the region, India. However, with a population exceeding 160 million, Bangladesh has been steadily building its economic strength and is now emerging as an attractive frontier growth market in South Asia. This presents a sizeable opportunity for organisations seeking to expand their global footprint and further establish a presence in the South Asia region. In this article, we explore some of the economic growth drivers for Bangladesh and potential opportunities for global companies to tap into. Read more about Bangladesh's recent economic growth and investment potential in PwC's Growth Markets Centre's latest blog.
- Japan has one of the highest levels of public debt to GDP of any country in the world. In 2015 the ratio stood at 229%, compared with 74% for the US and 19% for China. Since Japan has a shrinking population and almost no economic growth, one wonders how this can ever be paid off. On top of which, the Economist Intelligence Unit expects the ratio to keep rising, to 253% of GDP by the end of the decade.
- The Malaysian economy expanded by 4.2% year-on-year in the March quarter, moderating from a 4.5% growth in the previous period but slightly above market expectations of a 4.1% expansion. It is the weakest growth since the first quarter of 2013.
- South Korea’s economy grew in the first quarter by just a shade more than initially revealed. GDP grew by 0.5 per cent quarter-on-quarter in the first three months of this year, up from the initial estimate of 0.4 per cent. That was enough to bump up the yearly rate by 0.1 percentage points to 2.8 per cent. Economists, on average, expected no change.
- Indonesia’s economy grew 4.9% in Q1 2016. Overall, government consumption disappointed as it grew 2.9% y/y in Q1, down from 7.3% y/y in Q4 2015. Meanwhile, although household consumption maintained its growth rate of 5%, the three rate cuts by Bank Indonesia since January this year appear to have had little noticeable impact.
- The Bank of Japan decided not to adjust its policy at its latest meeting, surprising markets which had anticipated another round of stimulus measures in light of reduced forecasts for growth in Japan and the strength of the yen. The currency rose sharply after the decision. At its meeting the Federal Reserve kept its options open about raising interest rates in June, making references to international risks to the US economy without signalling an imminent rate rise.
- Japan’s economy grew by an annualised 1.7% in the first quarter, helped by the extra day in the leap year. It had shrunk in the previous quarter. The government is thought to be considering scrapping a forthcoming sales-tax rise to keep the economy on track.
- The Asian Development Bank cut its Asian growth forecast to 5.7% overall in both 2016 and 2017 [down from 5.9% in 2015]. It speculates that we may be in the midst of a 'new normal' for potential growth. However, developing Asia will still continue to contribute 60% of world growth. The ADB sees accelerated growth for South Asia and ASEAN in 2017.
- Oxford Economics' report 'Indonesia - Why Indonesia is very unlikely to achieve 7% growth' found that when President Joko Widodo took office in 2014 he targeted growth of 7% by 2017. He promised an infrastructure boom and an improvement in Indonesia’s investment climate to boost domestic growth. However, in 2015, growth fell to its slowest pace in six years. Undoubtedly, global factors have weighed on Indonesian growth, but the domestic policy landscape is equally responsible for the economy’s disappointing performance.
- Business conditions in Japan’s manufacturing sector are at their worst since the early days of Abenomics in 2013 as a stronger yen takes its toll on corporate confidence. The Bank of Japan’s quarterly tankan index came in at a reading of +6 in March, down from +12 in December and below analyst expectations of +8. The reading, published on Friday, was the worst since June 2013.
- South Korea’s economic slowdown deepened in the first quarter of 2016, with sluggish exports and domestic consumption weighing on growth and adding to pressure on the Bank of Korea to cut interest rates.
- Australia’s economy grew more than expected in the fourth quarter, delivering a boost to the government of Malcolm Turnbull in an election year and defying fears over the impact of China’s slowdown. Gross domestic product grew a seasonally adjusted 0.6 per cent quarter-on-quarter in the three months to the end of December, thanks to a boom in household consumption and higher government spending. On an annual basis GDP grew 3 per cent, back to its long-term trend rate and ahead of economists’ consensus estimate for 2.5 per cent growth.
- In fact, the Australian economy grew 0.6 % in the final quarter last year, taking growth for 2015 to 3%. Growth was driven by a rise of 0.8% in household final consumption expenditure and a rise of 6.0% in public capital spending. These were partially offset by a 3.3 % fall in private business investment, driven by a 12.3% decline in new engineering construction.
- The Japanese government is getting paid to borrow money after selling benchmark bonds with a negative yield for the first time (Y2.2tn / $194bn in 10-year paper). The upside-down auction follows three years of monetary easing by the BOJ, which has driven interest rates lower in a bid to spark lending. The auction means investors have paid a fee to lend money for a decade to the government.
- The Bank of Japan then left its benchmark interest rate on hold at -0.1%. Haruhiko Kuroda, the central bank’s governor, defended negative interest rates as a useful tool in the battle against deflation, and even suggested that the rate could be brought down to -0.5% if the economy faced headwinds from a financial crisis.
- According to PwC analysis, Myanmar is one of the remaining frontier markets which is expected to become Asia’s next rising star. Over the past five years, the government has established the necessary fundamental building blocks to tap into the country’s true potential and multiple changes in regulations are already being undertaken to support the economy. Prior to the elections in November 2015, the economy was already projected to grow at a rate of 7 to 8% annually and broad market sentiment is hoping that this can further improve with the National League for Democracy (NLD) winning the elections and about to come to power. Learn more about the country and its key economic reforms on the GMC blog.
- A new Economist survey found that almost 30% of respondents indicated their outlook for revenue growth in Asia has declined compared to the view held when heading into the previous year. This represents a marked deterioration from the high-level expectations expressed in past surveys. Yet within this “new normal” of lowered expectations, most respondents still anticipated growth of some kind. Prospects for Asia overall are viewed positively with the economies of India, China, and South-east Asia attracting the greatest proportion of bullish sentiments.
- Australia’s unemployment rate climbed back to 6% in January (seasonally adjusted terms), as the job market shrunk by about 8000. In trend terms however, the unemployment rate fell to 5.8% (5.9% in December 2015) and the number of people in employment grew by 19,800. The ABS labour force estimates continue to show unusual monthly volatility.
- Bank Indonesia (BI) cut its key policy rate by another 25bp at the February policy meeting, taking it down to 7%. The central bank also lowered the primary reserve requirement ratio by 1% point to 6.5%. Low inflation, modest growth and favourable financial market developments gave room for BI to cut rates.
- Indonesia’s GDP growth climbed back to 5% in Q4, beating consensus. Investment growth, led by government infrastructure spending, rose to 6.9% y/y, adding 2.3 pt to headline growth. Meanwhile, government consumption grew by 7.3% y/y. GDP growth was 4.8% in 2015, the slowest rate recorded since 2009.
- Japan's annual exports in January fell the most since the global financial crisis as demand weakened in China and other major markets. Exports dropped 12.9% Y/Y, with the fourth straight month of declines led by a fall in shipments of steel and oil products. Imports declined 18%, leaving a ¥645.9B ($5.7B) trade deficit.
- The Bank of Japan surprised markets by adopting a negative interest rate —meaning that banks will now have to pay for the privilege of depositing funds at the central bank. It is not the first central bank to do this: those in the eurozone, Sweden and Switzerland, among others, have all breached the zero-barrier in the last year or two. After the move, borrowing costs for the Japanese government for 10 years fell to 0.07%.
- See also: Not So Great Expectations for Japan, from strategy+business.
- For an ongoing update some of the more thoughtful and significant recent commentary on the Chinese economy, see On the Chinese economic uncertainty.
- See also: Chinavine 13/01/16.
- Despite four years of economic stimulus, Japan’s economy remains only 2.2% bigger in real terms than when Prime Minister Shinzo Abe came to power promising massive structural reforms. But while Japan’s government is pushing companies to increase investment at home and raise wages to boost demand, stimulate the economy and escape deflation, the pace of improvement remains subdued, noted the Financial Times.
- In The Future of Asia Pacific, Grant Thornton drew on interviews from our International Business Report and data from the IMF, UN and Economist Intelligence Unit to explore the opportunities and challenges for business growth in Asia-Pacific. The slowdown in China, regional tensions and ageing populations emerge as key threats to regional growth prospects, while businesses are excited by the Trans-Pacific Partnership and increased ASEAN cooperation.
- Australia’s GDP growth strengthened in the September quarter, to 0.9% in the quarter and 2.5% over the year, up from 0.3% in the quarter and 2.0% over the year to June. Australia’s long-run average annual GDP growth rate is around 3.1%.
- For an ongoing update some of the more thoughtful and significant recent commentary on the Chinese economy, see On the Chinese economic uncertainty.
- Official figures released just three weeks ago indicating that Japan had dipped into recession were revised to show that the economy had grown. An initial estimate recorded GDP contracting at an annualised rate of 0.8% in the third quarter, but updated numbers on business investment suggest that the economy instead grew by 1%.
- Business leaders in the Asia- Pacific are losing confidence in their revenue prospects because of China's cooling economy and perceived higher risks in emerging markets. Just 28% of businesspeople with investments in Asia Pacific Economic Cooperation (APEC) economies said they were "very confident" revenues would increase in the next 12 months, according to PwC's new APEC survey.
- After an unprecedented three-year hiatus, the annual trilateral China-South Korea-Japan summit finally took place, marking a cooling of major power tensions in northeast Asia. The trilateral meeting was purposeful and workmanlike, according to Eurasia Group, with all three governments privately agreeing to spend more time dealing with the business of business, allowing for less distraction from contested history and posturing on national defence.
- Thomson Reuters, in association with Merrill Datasite, released the latest SouthEast Asia M&A Regional Report 2015, confirming SouthEast Asia as one of the least active markets in 2015. Activity has failed to live up to expectations and volumes have slumped to their lowest levels in five years, amid tougher macro-economic conditions and a shift in the deal cycle. Record levels of activity seen in 2014 came to a halt in the first nine months of 2015, when activity fell to US$63bn from US$140bn a year earlier. The level of M&A engagement has not decreased, but there was less mega-deals activity. Deal pipelines are strong but participants are waiting for economies and the markets to recover or stabilise before pressing ahead with transactions.
- Total private capital expenditure in Australia declined by 9.2% in the September quarter in real (inflation-adjusted) terms, and was down by 20% over the year. This is the largest annual decline recorded in CAPEX since this data series began in 1987.
- Business lending in Australia picked up by 1.2% in September - its largest monthly rise in seven years (September 2008). Over the past year, business lending has risen by 6.3%, which bodes well for investment and economic growth in the coming quarters.
- For an ongoing update some of the more thoughtful and significant recent commentary on the Chinese economy, see On the Chinese economic uncertainty.
- Most businesses in Indonesia remain optimistic of growth prospects within the next five years, despite lingering anxiety amid global and local economic uncertainty, according to PwC's 2015 Asia-Pacific Economic Cooperation (APEC) CEO survey, released on Monday, reported that 25 percent of respondents with business in Indonesia remained “very confident” about their prospects in the next 12 months, while 41 percent were “somewhat confident.” About 44 percent of respondents also still have plans to increase investments in Indonesia over the next year. Indonesia was cited, along with the United States and China, as being an attractive destination for future investment, the survey found.
- Indonesia’s GDP came in at near six year lows of 4.7% y/y missing forecasts for 4.8% growth. In line with expectations and as promised by the authorities, government consumption jumped 6.6% y/y in Q3; while its contribution to headline growth rose to 0.5%. According to comments from President Widodo the government spent 70% of the allocated budget as compared to only 35% in H1 2015 and it is likely to go up to 94% by the end of the year.
- The 2016 budget in Indonesia will focus on broadening the tax base and encouraging infrastructure spending. However, argued to Eurasia Group, the government will likely fail to meet its revenue target next year as efforts to improve tax collection will be undermined by an inefficient and corrupt bureaucracy.
- Nevertheless, while Indonesia's challenges and opportunities have been well documented: poor infrastructure, loads of corruption and complex and unnecessary regulation, alongside a huge population, boom in consumer spending and a rich endowment of natural resources. Sustainable and efficient use of all of Indonesia's various resources would not just be good for business, but also for the livelihoods of its 250 million people. Hopes for business-friendly reform were high when Joko Widodo became president in late 2014, but have largely been dashed as the country continued to become a more difficult place to do business. Happily, argued The Economist Intelligence Unit, there are now signs that this might be starting to turn around.
- Japan’s Q3 GDP contracted by 0.2% q/q, putting the economy back into recession just a year after the last one, triggered by a consumption-tax increase. Weakness in business investment and shrinking inventories drove the contraction as slow growth in China and a weak global outlook prompted Japanese companies to hold back on spending and production. While growth is expected to pick up in the current quarter, the GDP report could put pressure on Prime Minister Abe and the Bank of Japan to boost fiscal and monetary stimulus. Meanwhile, Japan’s unemployment rate hit its lowest level in 20 years but the central bank’s favourite measure of inflation fell in another mixed month of economic data.
- Japan is back in recession after its economy shrank at a worse than expected annualised rate of 0.8 per cent in the third quarter. The figure, well below expectations of a 0.3 per cent fall, is a fresh blow to Prime Minister Abe's efforts to end deflation and revitalise economic growth.
- The Bank of Japan left its policy unchanged refraining from expanding its QE programme beyond the current ¥80trn a year. This is despite the BoJ once again pushing out the date by which it expects to meet its 2% inflation target. The date is now the second half of fiscal 2016 (Q4 2016 to Q1 2017) rather than the first half.
- Business leaders in the Philippines are confident on the growth prospects in the country despite the overall uncertainty felt by many chief executive officers (CEOs) within Asia Pacific towards the region's investment status. On the sidelines of Asia Pacific Economic Cooperation (APEC) meeting being held in Manila, PricewaterhouseCoopers (PwC) revealed on Monday its fifth annual APEC CEO Survey, which determines the CEOs' level of confidence towards the business growth in the region. In the survey, it was noted that while the confidence among Asia Pacific CEOs is at lowest level since 2012, Filipino business leaders, in general, are not particularly pessimistic about the business prospects in the Philippines.Alexander Cabrera, PwC Philippines Chairman and Senior Partner, said 51 percent of Philippine CEOs are very confident about their revenue prospects over next 12 months.
- The slowdown in China, weaker commodity prices and the prospect of tighter external financing conditions are dimming the growth outlook for developing East Asia-Pacific, the World Bank warned, a region that has long been a bright spot in the world economy. It downgraded its 2015, 2016 and 2017 growth projections for developing East Asia-Pacific to 6.5, 6.4 and 6.3% respectively.
- Meanwhile, the energy landscape in Southeast Asia continues to shift as rising demand, constrained domestic production and energy security concerns lead to a greater role for coal, a sharp rise in the region’s dependence on oil imports and the reversal of its role as a major gas supplier to international markets.
The Australian Financial Review (AFR) released the results of its annual accounting partnership survey. Among its key conclusions, the AFR noted:
- "PwC has proven itself the most productive accounting partnership in the country for the third year running with each partner generating an average of $3.5 million in fees in the year to June 30, 2015. But it is no longer the only big four accountancy firm where partners generate in excess of $3 million revenue each.
- "For the first time, KPMG has also broken that barrier with each of its 402 partners generating an average of $3 million in fees during the 2014-15 fiscal year. PwC's 492 partners earned a total of $1.7 billion in fees in the year to June 30, eclipsing its nearest rival, KPMG, by more than half a billion dollars."
- "The nature of private partnerships make them incredibly opaque, however, industry sources say PwC had its most profitable year on record in 2014-15. It has thinned its senior management ranks and focused some leaders back into market facing roles. An extreme focus on cost control does not always equate to a palatable organisational culture. But it is the mandate Luke Sayers was elected on when he became chief executive of the Australian practice 3 years ago."
- "Gary Wingrove also upped the ante on KPMG's high performance culture when he took the chief executive reins in 2013, tweaking the remuneration model by lowering base salaries and increasing stretch targets. The results speaks for themselves. KPMG's 402 partners earned an average of $3 million each and $1.2 billion collectively."
- "EY's 461 partners earned an average of $2.8 million each and aggregate billings of $1.3 billion. EY profits are said to have rebounded after suffering during its regional integration a few years ago. The regional integration is widely regarded as a strategically brilliant move that saw the Australian practice integrate more closely with fast-growing Asian markets.
- "While ranked second on the basis of annual income, Deloitte ranked eighth in terms of revenue per partner due to its much larger partnership. Deloitte uses a different definition of partner to most accounting firms which inflates its partner group to 632, a significant jump on its closest rival PwC (492 partners). Deloitte's revenue of $1.3 billion averaged out to $2.1 per partner, behind much smaller rivals including insolvency specialists KordaMentha, PPB Advisory and McGrathNicol."
"Crowe Horwath had the fastest growth in revenue per partner of any surveyed firm, up 17% to $2.2 million for each of the firm's 221 partners. This was not altogether a glowing result, given it is in large part due to a steady exodus of senior staff as the group's performance floundered, culminating in a takeover by KKR-backed financial services firm Findex. At the other end of the spectrum, revenue per partner at McGrathNicol fell by 16%, to $2.3 million for each of the firm's 29 partners."
Full article here.
- The World Economic Forum’s Global Competitiveness Report revealed that Australia’s global competiveness improved slightly over the past year following four years’ of deterioration. Australia’s ranking of 21st most competitive economy in 2015-16 sits with countries such as Malaysia (18th), Belgium (19th), France (22nd) and Austria (23rd). Countries with similar economic profiles to Australia scored better, with Canada at 13th (up from 15th in 2014-15) and New Zealand at 16th (up from 17th in 2014-15).
- The China-Britain Business Council (CBBC) announced the creation of a new Advisory Council made up of some of Britain’s leading business people with China connections, including PwC UK Chairman and Senior Partner Ian Powell. The new initiative has been set up to assist CBBC members in both the UK and China and drive forward collective China business efforts. The Advisory Council will raise awareness of the business opportunities in China and third markets across a wide range of sectors, encourage more UK companies to engage with China, and boost trade and investment between the two countries.
- New research by the McKinsey Global Institute (MGI) suggested that to realise consensus growth forecasts - 5.5 to 6.5% a year - during the coming decade, China must generate two to three percentage points of annual GDP growth through innovation, broadly defined. If it does, innovation could contribute much of the $3 trillion to $5 trillion a year to GDP by 2025 and China will have evolved from an “innovation sponge,” absorbing and adapting existing technology and knowledge from around the world, into a global innovation leader.
- The People's Bank of China cut the one-year deposit and lending rates again by 25bp to 1.5% and 4.35% respectively, and removed the ceiling for deposit rates. It also lowered the reserve requirement ratio (RRR) for large banks by 50bp to 17.5%. Furthermore, the PBoC reduced the RRR of banks that primarily lend to the agricultural sector and SMEs by an additional 50bp. This is only the second time since the height of the global financial crisis that the PBoC has acted on both interest rates and the main RRR at the same time (the other time was in August). Furthermore, earlier this week it had already injected RMB105.5bn into the banking system.
- China’s exports fell by 3.7% in September, in dollar terms, compared with the same month last year and imports were down by 21%, raising more concerns about the country’s slowing economy. However, China’s imports of some commodities, such as copper, have increased by volume on some measures, adding to the uncertainty about how fast the economy is actually growing.
- Could we be about to witness the great fall of China or will the country continue to power the global economy? China delivered one of the highest growth rates of any global economy over the last decade. However, its recent real estate slowdown and resulting stock market turmoil reignited fears of another global financial crisis. Explore PwC's selected insights in Spotlight on China to find out more.
- The Asian Development Bank cut its growth forecast for the region's developing economies, citing a softer outlook for China and India and a delayed recovery in the world's advanced industrialised nations. Regional growth is forecast to slow from 6.2% in 2014 to 5.8% in 2015, with a slight rebound to 6.0% in 2016. For the five large economies in the Association of Southeast Asian Nations the growth forecast for this year is lowered to 4.8% - a slight uptick from 2014 - before accelerating to 5.3% next year.
- ASEAN is to implement an ASEAN economic community (AEC) by end-2015. Oxford Economics assessed whether it is a new opportunity or a folly and concluded it is more of the latter. Oxford Economics found that ASEAN has learnt from the EU’s mistakes but the AEC will not provide much of the promised economic boost in the short term. There will be longer term benefits - eventually - but no sudden gain.
- East Asia will grow more moderately in the near term. Growth faltered in all economies in the subregion in the first half of 2015. Weaker than expected outcomes in the PRC and indications of softness in 2016 prompt downward revisions to growth projections for the subregion’s largest economy. Growth in the PRC is expected to drop to 6.8% from 7.3% in 2014, but support from strengthening external demand plus accommodative monetary and fiscal policies should contain further growth moderation to 6.7% in 2016. East Asia is expected to expand at 6.0% in both 2015 and 2016, a considerable slowdown from 6.5% in 2014. Inflation will remain moderate and below the ADO 2015 forecast. It is forecast to fall to 1.4% in 2015 and rise to 2.1% in 2016, mainly tracking the expected trend in global commodity prices. Although Mongolia now has inflation slowing to below double digits - to 7.6% in both 2015 and 2016 - it remains the outlier in a subregion otherwise marked by low inflation.
- Southeast Asia’s projected growth recovery is delayed to next year. Subdued economic growth in the major industrial economies and the PRC weakened export demand. Thailand has yet to bounce back from its 2014 slump, while infrastructure investment has fallen behind schedule in Indonesia and the Philippines. Drought in several countries, and floods in Myanmar, have hurt agriculture. Vietnam, by contrast, is growing faster than anticipated earlier this year, powered by foreign direct investment and buoyant private consumption. Subregional growth is forecast to be 4.4% in 2015 - the same pace as in 2014 but below the 4.9% forecast in ADO 2015. Expected improvements in exports and infrastructure investment are seen lifting growth to 4.9% in 2016. Inflation in most economies is milder than projected in March. However, inflation that was higher than anticipated in Indonesia, the biggest economy in Southeast Asia, keeps the subregional inflation projection at 3.0% for 2015 and lifts it to 3.3% for 2016.
- Asia Pacific (ex Japan) Technology targeted M&A volume reached $106.4bn in 2015 YTD, the highest YTD volume on record and almost doubled the $53.2bn announced in 2014 YTD. Deal activity is also up 18% year-on-year to 1,591 deals so far this year. Technology is the second most targeted sector globally with a record $401.4bn announced in 2015 YTD, and is up 93% on 2014 YTD ($208.4bn). China leads Asia Pacific (ex Japan) technology targeted M&A volume with $88.2bn in 2015 YTD, up from just $31.5bn in 2014 YTD and the highest YTD total on record. South Korea and India follow with $5.0bn and $4.1bn, respectively.
- Lack of sufficient leadership talent is a top issue currently facing 86% of HR and business leaders, according to Deloitte’s “Southeast Asia Human Capital Trends 2015: Leading in the New World of Work” report. All respondents reported that leadership was at least somewhat important to their business. However, the majority of organisations are still struggling to develop a pipeline of leadership talent. This current struggle jeopardises future growth.
- EIU raised its real GDP growth forecast to 6.9% in 2015, from 6.8% previously, following the release of better than expected second-quarter economic growth figures. The sharp drop in global oil prices in late 2014 will feed into weaker consumer price inflation in 2015, when it is expected to average 1.6%, compared with 2.1% in 2014. Producer prices will fall for a fourth successive year in 2015, declining by a worrying 3.9%.
- China's non-financial outbound direct investment (ODI) rose 18.2 percent to 473.4 billion yuan ($74.34 billion) in the first eight months of this year from the same period a year earlier. The ministry gave a dollar figure for outbound direct investment of $77 billion, though at current exchange rates it is closer to $74.3 billion. Much of China's investment occurred prior to a sharp one-off yuan depreciation engineered by the central bank in August, which changes the calculation basis.
- Long-awaited government reforms of China’s state-owned enterprises were unveiled, to much disappointment. The plan allows for greater private-sector involvement, but couches this in terms of the state continuing to play a dominant role in the firms’ activities. It also said nothing about whether the SOEs would ever be allowed to fail, which many see as the real test of China’s commitment to market reforms.
- After decades of pursuing cheaper manufacturing overseas, “made in Japan” products — from Honda scooters, Panasonic microwaves to Canon cameras — are back in the vogue thanks to the weaker yen.
- The Nikkei surged by 7.7%, its biggest one-day increase since 2008, a welcome relief for investors in Japan’s benchmark share index following a sharp drop in August.
- However, Standard & Poor’s cut its credit rating for Japan by a notch. It blamed the government’s economic policies for its decision, saying that although the reforms of the government under Shinzo Abe, the prime minister, had shown “initial promise”, Abenomics has not tackled “a very weak fiscal position…ageing population and persistent deflation”.
- Doing business in Taiwan is a concise new PwC guide to the key aspects of undertaking business in Taiwan. It is a useful reference for foreign companies and investors planning to set up or expand their presence in Taiwan, which is one of the most competitive places in the Asia-Pacific region for business, as well as an important trade and investment gateway to emerging Asian markets and China in particular. The latest edition, published in September 2015, provides a concise, up-to-date picture of Taiwan’s business regulatory and tax environment.
- Fears deepened about whether the Chinese economy was heading for a “hard landing”. Many share indices swung wildly. The main Shanghai index plunged by more than 8% in a single day, its biggest loss since early 2007, wiping out the gains it had made since the start of the year. The S&P 500, FTSE 100 and other markets in Europe and Asia were also rattled, with some recording their steepest falls since the financial crisis in 2008. One source of worry for investors was data showing that Chinese manufacturing in August had shrunk the most for more than six years. The latest assessment of the smartphone market from IDC, a research firm, predicted that shipments in China will increase by just 1.2% this year, down from 19.7% in 2014.
- China's official manufacturing purchasing managers’ index edged lower to 50.0 in July from 50.2 in June. A reading of 50 is right at the cut-off point between expansion and contraction compared with the previous month. Sub-indexes showed weakness across a broad front, including output as well as new orders and new export orders along with employment and prices for materials. China's economy grew at a better-than-expected 7% in the second quarter from a year earlier in line with the government's target of about 7% growth for the full year. But the second quarter figure was still the slowest pace in six years.
- For some of the more thoughtful and significant recent commentary on the Chinese economy, see On the Chinese economic uncertainty.
- In a setback for the government’s programme of economic reforms, Japan’s GDP shrank by an annualised rate of 1.6% in the second quarter, the first contraction since a steep rise in the sales tax in mid-2014 deterred spending. Private consumption, the main driver of the economy, remains weak, but business investment and net exports also fell.
- Indonesia’s GDP grew by 4.7% year on year in Q2 - unchanged from the previous quarter. Capex investment rose 3.6% y/y, the lowest annual rate since Q4 2013, as business sentiment was impacted by an uncertain global environment and ongoing delays in executing domestic reforms. Government expenditure growth eased to 2.3% y/y, while private spending softened.
- Malaysia’s GDP growth eased to 4.9% year on year in Q2 from 5.6% in Q1 (the slowest annual rate since 2013). However, given weaker external demand, the outcome was solid. On a quarterly basis GDP growth only slowed marginally to 1.1% q/q from 1.2%.
- Southeast Asia targeted M&A volume totalled $31.6bn in 2015 YTD, down 19% on the $38.9bn announced in 2014 YTD and the lowest YTD level since 2009 ($19.0bn). In contrast, cross-border Southeast Asia targeted M&A volume has reached $16.1bn, up 62% year-on-year. Volume is led by inter-regional inbound M&A volume with $13.4bn, the highest YTD total since 2012 ($13.6bn) and up 75% on 2014 YTD ($7.7bn). Despite the decline in Southeast Asia M&A volume, Asia Pacific targeted M&A volume has reached a record $629.6bn in 2015 YTD and up 42% on the same 2014 period ($444.5bn)
- Across Asia, investments in technology start-ups have escalated at the same swift pace and to the same heights as in the United States. In the first six months of this year, 46 Asian start-ups, had fund-raising rounds of $100 million or more, just short of the 48 in North America, according to the research firm CB Insights.
- Deloitte merged its sustainability and workplace health & safety businesses, and invested in a new safety leadership and culture change business, creating one of the largest professional services sustainability practices in Australia. Deloitte welcomed as a partner Jane Magree, former Director and Principal Consultant of Alinea Consulting, to manage the organisational culture change arm of the Sustainability Services practice.
- For some of the more thoughtful and significant recent commentary on the Chinese economy, see On the Chinese economic uncertainty.
- Real GDP expanded by 7% year on year in April–June, unchanged from the first quarter of the year, suggesting that policy easing has proved more effective in stabilising economic activity than suggested by high-frequency data. Tertiary industries, especially the financial sector, drove the growth in the second quarter as financial activities boomed for much of April–June on the back of rising domestic stockmarkets.
- China’s foreign direct investment inflows rose 8% in the first six months from a year earlier. Investment into China’s fast-growing services sector jumped 23% in the first half of 2015 from a year earlier. China’s outbound direct investment soared 29.2% to US$56 billion from January to June compared with the same period a year earlier, state television reported, citing the commerce ministry.Foreign direct investment is an important gauge of the health of the external economy that sustains China’s vast factory sector, but is a small contributor to overall capital flows compared with exports, which were worth US$2.3 trillion in 2014.
- China's economic growth held steady in the second quarter, as key production indicators rebounded, suggesting that a series of stimulus measures launched since late last year has succeeded in cushioning a long-term secular decline. The statistics bureau reported second-quarter growth of 7%, unchanged from the first quarter and exactly in line with Premier Li Keqiang’s full-year growth target of “around 7 per cent” for 2015 (China’s economy grew at 7.4% in 2014).
- China's parliament published a draft cybersecurity law that consolidates Beijing's control over data, with potentially significant consequences for internet service providers and multinational firms doing business in the country. The document strengthens user privacy protection from hackers and data resellers but elevates the government's powers obtain records on and block dissemination of private information deemed illegal under Chinese law. Citing the need "to safeguard national cyberspace sovereignty, security and development," the proposed legislation will allow China to bolster its networks against threats to stability and better regulate the flow of information.
- The Chinese government staged, for the Economist Intelligence Unit, an extraordinary intervention to try to stem the popping of what was a very clear stockmarket bubble. The benchmark Shanghai A-share index is down by around 30% since its peak on June 12th. The important impact here will not be seen immediately. Indeed, the impact on the real economy in the short term is likely to be slight. But for the EIU there are two big reasons to become a bit more pessimistic longer-term. The first is that the Chinese leadership have firmly stamped their names on the intervention. It looks to be their first major mis-step, and could be the precursor to some internal wrangling. The second is what the intervention says about the likelihood of medium-term economic reform. Certainly it does not seem to reflect policymakers committed to giving markets a 'decisive' role, as promised in 2013 by the Chinese Communist Party government.
- In 'Greek crisis is nothing compared to China', CNN Money warned that instead of focusing on Athens, investors should be much more worried about what's going on in China. The Shanghai Composite and Shenzhen Composite have both plunged about 30% from their highs due to legitimate concerns that Chinese stocks are in a bubble. China's government is taking steps to try and minimise any more pain in the market. However, as one tweeter put it, "China has lost 15 Greeces in market cap in three weeks".
- China must take urgent steps to reform a “distorted” financial system in its transition to a more balanced economic model, the World Bank warned in its latest review of the country’s economy. Financial reform will only prove effective if it removes the distorted incentives and poor governance structures that have affected how financial resources are mobilised and allocated,” the bank said. “A fundamentally reconfigured role of the state in the financial system is essential.”
- Accenture increased its strength in Asia Pacific with the acquisition of PacificLink Group, an independent set of full service digital agencies in Hong Kong. The acquisition significantly expands the ability of Accenture Interactive, part of Accenture Digital, to bring its unique blend of digital design, marketing, content and commerce services to clients in the rapidly expanding Greater China market. PacificLink employs approximately 240 professionals in Hong Kong and includes a number of multi-award winning agencies that specialise in creating and delivering an integrated and connected set of differentiated marketing solutions for brands across a full spectrum of online and offline platforms. The move strengthens Accenture Interactive’s ability to help CMOs and CIOs bridge the gap between marketing and digital technologies.
- According to the Economist Intelligence Unit, a weakening in real-estate investment will cause real GDP growth in China to ease to 6.8% in 2015, from 7.4% last year. The sharp drop in global oil prices in late 2014 will feed into weaker consumer price inflation in 2015, when it is expected to average 1.5%, compared with 2.1% in 2014. The renminbi is expected to remain flat against the US dollar in 2015, representing a substantial appreciation in real effective terms given declines in the value of the yen and euro.
- Japan outbound M&A reached $53.2bn via 317 deals in 2015 YTD, the highest YTD volume on record and up 69% on 2014 YTD ($31.6bn via 313 deals). United States remains the most targeted nation for five consecutive YTD periods since 2010 with volume in 2015 YTD reaching $18.4bn via 81 deals, representing 35% of Japan outbound M&A in 2015 YTD. China and Australia follow with $10.4bn and $6.8bn, respectively.
- KPMG in New Zealand acquired Myers Business Solutions, a firm of chartered accountants providing services in Ashburton The company has seven employees and appears to simply be a regional expansion.
- South Korea's economy recorded its weakest expansion in six years in Q2, recording 0.3% growth from the previous quarter. The outbreak of the MERS virus in late May notably dampened consumer demand and tourist arrivals fell by 41.3% y/y in June. Farm output also fell sharply, albeit temporarily due to a drought.
- KPMG LLP was named the ‘Best Company for Asian Pacific Americans to Develop Workforce Skills’ by the Asia Society for the third consecutive year as part of the 2015 Asian Pacific Americans (APAs) Corporate Awards. The Asia Society, a leading global and pan-Asian organisation working to strengthen relationships among the United States and Asia, made the announcement at their seventh annual Diversity Leadership Forum where companies at the forefront of promoting APAs and global diversity were honoured.
- The Financial Times published an FT Focus - Asia special edition.
- According to BankofAmericaMerrilLynch, for Asia Pacific’s most influential CFOs, 2015 will be a year of growth but will require a heightened level of courage, commitment and care to deliver on expectations. Change will be inevitable. Challenges will be multi-faceted. Risk and market volatility will remain a reality. But with an actively managed finance strategy and a clear understanding of the diverse headwinds, opportunities will materialise. These are some of the projections of Asia Pacific’s leading CFOs.
- integrAsian, a new Economist Intelligence Unit study, sponsored by ANZ Banking Group, looked at how trade and investment ties between Asian economies are evolving, and the opportunities as well as risks this process is creating for the private sector. This report is based on a survey of senior executives at 525 companies in Australia, China, Hong Kong, India, Indonesia, Singapore and Taiwan, as well as interviews with business leaders and experts. It also examines how growing integration affects the business strategies of firms in the region through profiles of companies in three industries: information technology, consumer electronics and energy.
- KPMG Australia announced a record 51 new partners and executive directors. The breakdown by line of service is as follows: Advisory 50% (dominated by management consulting and deal advisory); Private Enterprise 18%; Tax 18%; Audit 10% and Shared Services 4%.
- A stronger-than-expected jump in mining exports helped Australia’s economy to expand by 2.3% in the first quarter compared with the same three months last year. Joe Hockey, the Treasurer, said the figures reflected the “deep resilience” of the economy. But with consumer spending still weak, the Reserve Bank of Australia erred on the side of caution and kept interest rates on hold at a record low of 2%.
- China will increase support for cross-border e-commerce as the world's second-largest economy shifts from manufacturing to higher-value services, the government said. China's e-commerce industry has been booming in recent years, with companies like Alibaba Group Holding Ltd and JD.com Inc benefiting from a rising middle class with more disposable income. The government released policy guidelines that include tax policies aimed at boosting domestic consumption and pilot projects to ease overseas payments, according to a statement posted on the central government's website www.gov.cn.
- According to Eurasia Group, China’s leadership is undertaking an historic reform agenda, seeking to overhaul political and corporate governance in order to shift toward more sustainable growth. To facilitate this process, senior leaders will work to strengthen their internal standing within the government and to bolster popular legitimacy by demonstrating progress on issues such as the environment and income inequality.
- China aimed to pledge a multi-billion dollar investment in Europe’s new infrastructure fund at a summit in late June in Brussels, Reuters reported. The exact sum has yet to be decided. In return for the investment in Europe, China is expected to ask Europe to invest in its revival of the Silk Road. The “One Belt, One Road” initiative is expected to build energy and communications links such as railways, highways, oil and gas pipelines, power grids, Internet networks, maritime and other infrastructure links across Central, West and South Asia to as far as Greece.
- The Economist Intelligence Unit now expects the Chinese economy to grow by 6.8% in 2015, as rising incomes support household spending growth but as slowing growth in investment - especially in property- holds back the pace of expansion. falling global oil prices and excess local industrial capacity will cause average consumer price inflation to slow to 1.2% in 2015, from 2.1% in 2014. The renminbi is expected to weaken against the US dollar in 2015, depreciating on an annual average basis for the first time since 1994.
- Japan’s economy grew in the first quarter at a much faster rate than had been thought. A revised estimate found that GDP expanded by 3.9% at an annualised rate, up from the 2.4% that was first reported last month. Inventories remained very high, prompting more warnings about a possible oversupply of goods in the economy, but the upward revision also reflected a surge in business investment.
- Deloitte appointed its first Asia Pacific leader to come from Japan. Yoichiro Ogawa, who has a 30-year career with Deloitte Japan, will serve a four-year term. In his role, Ogawa will be responsible for driving market leadership and quality across the region, strengthening the firm's brand and client services and identifying further growth opportunities while working with member firm leaders to enhance bonds and collaboration. In addition to the Asia Pacific regional leadership role, Ogawa will also become the Deloitte global managing director of regions and will serve as a member of the network's executive and operating committees. Ogawa's appointment is part of the new leadership team set up by Punit Renjen, Deloitte's global chief executive as of 1 June 2015.
- China’s state secrets are set to be more effectively secured with a far-reaching five-year state-run cybersecurity programme, announced against the ever-growing cyber confrontation with the US, The plan is expected to refocus software purchase of the national government agencies and institutions to domestically-developed products. State-owned enterprises, financial institutions and government departments should improve software security, said the director of the ministry's software bureau.
- China will probably take a 25-30 % stake in the Asian Infrastructure Investment Bank and India is likely to be the second-largest shareholder. The bank will also be operational by the end of this year, prospective founding members said after meeting in Singapore to discuss policies. However, Japan then unveiled a plan to expand Japan’s financing for infrastructure projects in Asia by 30%, suggesting Tokyo’s intent to counter China’s push to spearhead a new regional investment bank.
- PwC published its Japan Rebooted Series: ASEAN, the next frontier: Tapping Southeast Asia’s surging growth.
- PwC's 0wn ASEAN, the next frontier found that Japan’s economy has just experienced its fastest quarterly GDP increase in over a year, based on first quarter numbers released by the government. This has raised hopes at home and abroad that the world’s third largest economy is on the road to recovery. To rapidly expand market share and insulate themselves from a stagnant domestic market, aging population and declining workforce, Japanese firms must increasingly look to emerging markets such as the ASEAN region for future growth. While Japan has traditionally been a strong FDI contributor to ASEAN, PwC believes that Japanese firms must continue to stride forward and seize this window of opportunity while it remains open.
- Capital is flowing out of China at a record pace, sparking fears over financial stability and complicating efforts by the central bank to support a slowing economy with lower interest rates. China ran a balance of payments deficit of $80bn in the first three months of the year, the largest quarterly net outflow on record, according to official data. The outflows are all the more striking because China’s trade surplus remained strong over the period. As falling commodity prices slashed the country’s import bill, it recorded a $79bn current-account surplus - the largest in nearly five years.
- Mainland China needs at least five million more qualified accountants if the country is to raise corporate governance standards, claimed the president of the Association of Chartered Certified Accountants (ACCA), who believes that China needs accountants for roles in government and regulatory organisations, as well as for private companies. The quality of Chinese accounting and audit standards has been called into question by international investors, following a series of scandals that have seen mainland Chinese companies listed overseas investigated for fraud or delisted.
- Are your headquarters in the right place? If you are based in New York, London or Paris, you might want to start thinking about moving east, according to Tham Sai Choy, Asia-Pacific chairman of KPMG. Despite the rise in wages, Asia is the place to be, and the launch of the ASEAN Economic Community at the end of the year will make that abundantly clear, he told the Nikkei Asian Review.
- Forum for the Future outlined seven trends that could make or break a sustainable future for Southeast Asia. It’s one of the fastest growing economic regions in the world, but rapid growth and the rising aspirations of a growing middle class is increasing pressure on natural resources. The area has lost 13% of its forests since 1992 - an area equivalent to the size of Vietnam, the UN Environmental Programme reported. The impacts of global deforestation on the climate will be felt close to home: the region is one of the world’s most vulnerable to climate change impacts, such as droughts, floods, typhoons, sea level rise and heat waves.
- India signed trade and economic co-operation deals worth $22bn ($14bn) in Shanghai as PM Narendra Modi's visit to China drew to a close. The agreements cover a range of industries including renewable energy, the financial sector and ports, along with more agreements worth $10bn (£6.3bn) covering education, railways, and scientific research.
- China is planning to invest up to $50bn (£32bn) in Brazil for new infrastructure projects. The deal was due to be signed by banks from both countries during a visit by Chinese Prime Minister Li Keqiang to Brazil. The money will go towards building a railway link from Brazil's Atlantic coast to the Pacific coast of Peru to reduce the cost of exports to China. The fund will also finance a joint venture to produce steel. Brazil currently exports much of its iron ore to China.
- According to PwC's own Overview of the Philippine Economy report, in 2014, the Philippine economy generated a total gross domestic product (GDP), at current prices, of more than 284.5 billion U.S. dollars, a slowdown in growth rate to 6.1% from the 7.2% in the previous year. Independent commentators and analysts attributed much of the underperformance in growth to the drop in government spending. Indeed, in 2014 government final consumption expenditures only grew by 1.8%, a sharp slow decrease from the 7.7% growth rate in 2013.
- In Australia, PwC holds the lion's share of big listed company audits. It performs 58 of the ASX 200 audits, worth $228 million in combined fees. PwC also generates the most revenue per audit, earning $4.1 million for each engagement on average, according to UNSW's analysis. (See also PwC's CEO Insights blog post - Future-proofing Australia’s workforce.)
- Strategy& worked with the World Economic Forum to develop and launch the Emerging Best Practices of Chinese Globalizers: Develop the Innovation Models report. This is based on a series of interviews and surveys of 120 Chinese globalising companies conducted over the past 12 months. Half of the surveyed companies are regarded as globalisation champions within China that have outpaced their peers in establishing global presence.
- China has for the first time overtaken the United States as Australia's largest source of foreign investment, according to official data, laying out Aus$27.7 billion (US$21.8 billion) in 2013-14 as real estate purchases more than doubled. Chinese spending in Australia for the year ending June 30, 2014 far outstripped the Aus$17.5 billion from the United States - which was the biggest investor for more than a decade - and Canada's Aus$15.4 billion, the Foreign Investment Review Board (FIRB) said in its annual report.
- The Industrial and Commercial Bank of China signed a deal to invest US$26 billion in Equatorial Guinea. The ICBC, China’s biggest lender, said most of the fund will go to providing infrastructural and financial support for the Equatorial Guinea government and Chinese enterprises located in the country. The pact, which marked another of the many spending sprees of China into Africa, follows a state visit paid by the President of the Republic of Equatorial Guinea to Beijing.
- A Chinese state-owned rail company signed $5.5bn worth of contracts in Africa, in the latest sign that the country’s “New Silk Road” strategy to build infrastructure around the developing world is showing tangible results. African units of China Railway Construction Corp will build a $3.5bn intercity rail line in Nigeria and a $1.9bn residential real estate project in Zimbabwe, the company said in exchange filings.
- Thailand’s central bank reduced its key rate to 1.5% to boost the country’s flagging economy.
- The EIU forecast that Chinese economic growth will slow to 7% in 2015, but lower inflation will provide support to real household consumption. ThePeople’s Bank of China may cut interest rates again in the second quarter of 2015, in order to offset the effects of slowing inflation, but monetary policy will remain fairly tight. Owing partly to lower global oil prices and also to excess supply in the economy, the EIU expects annual consumer price inflation to an average of 1.2% in 2015.
- Fitch slashed Japan’s sovereign rating from A plus to A, judging the world’s fourth-largest economy a worse credit risk than Malta or Estonia. The credit rating agency said it acted because the government of Shinzo Abe did not offset the lost revenue from last year’s delay in raising consumption tax.The downgrade is unlikely to have much immediate effect - domestic confidence in Japan’s public debt has survived bigger shocks - but it highlights a steady deterioration in the country’s public finances at a time when the central bank has embarked on an unprecedented Y80tn ($670bn) a year bond-buying programme.
- China's factory activity declined at its fastest pace in a year, according to HSBC/Markit's Purchasing Managers Index. PMI fell to 49.2 in April, beneath the 50-point level that separates growth from a contraction. Factories reported a second consecutive month of falling volumes of new orders, causing production to more or less stagnate. The weakening order book trend signalled an increased downturn in domestic demand.
- The Boao Forum for Asia Competitiveness Report 2015 showed that the “Four Dragons of Asia,” namely Singapore, Hong Kong of China, South Korea, and Taiwan of China, kept their lead as the top four.
- According to a new report, in the first quarter of 2015, 34% of business leaders in mainland China were optimistic in the economic outlook over the next 12 months, up from 25% in Q4-2014. Expectations toward profitability also rose accordingly. Some 30% of businesses expect to increase profits, and 38% anticipate revenues to go the same way, up from 13% and 37% over last quarter respectively. Businesses are also planning an increase in investment. Expectation for investment in new buildings (23%) and in plants and machinery (31%) both increased from 10% and 27% of last quarter.
- Official data revealed that Chinese exports fell 15% in March compared with the same month last year. This means export growth over the first quarter of the year, which saw double digit growth in January and February, slowed to 4.7% compared with Q1 2014, and 8.7% compared with Q4 2014. Imports also fell over the month, down 12.3%, while the nation’s trade surplus stood at $3.1bn, considerably below expectations. Bloomberg chief Asia economist Tom Orlik said that China’s government will look to cut interest rates to ease domestic conditions as a response.
- After some delay China at last announced that it would implement a deposit-insurance scheme starting on May 1st. By setting limits to the protection of savers, this is an important advance in the government’s promise to liberalise the financial system and encourage competition among banks. The scheme will insure bank deposits of up to 500,000 yuan ($81,000), which should cover up to 98% of accounts.
- Taiwan applied to join the new Asian Infrastructure Investment Bank, a rival to the World Bank that has been devised and will be unofficially led by China. More than 40 countries, including Britain, Germany and Russia, have signed up to the AIIB, despite American misgivings about its openness and creditworthiness. China was cool to the idea of admitting Taiwan: a foreign-affairs spokesman said Beijing wants “to avoid the two Chinas…situation”.
- EY added 55-lawyer South Korean firm Apex Legal to its legal network, as it looks to expand its footprint across the Asia-Pacific network. The planned 200-strong network of lawyers will span key commercial centres throughout the Asia-Pacific region, and the next step is likely to be in Hong Kong. Talks are also due to start with two small firms in Malaysia. Last year, EY added Shanghai-based law firm Chen & Co and Singapore law firm PK Wong & associates to its network. It also has legal services capability in Vietnam, as well as member law firms in India and Japan.
- Inflation in South Korea fell to a 16 year low of 0.4% in February, while the country reported its largest ever trade surplus last month of $US8.4 billion as imports and exports fell.
- A new Financial Times report on Japan, jointly produced with Nikkei, asked whether success in reigniting growth and dealing with Japan’s public debt would allow a happier, more optimistic country to emerge.
- Australia’s GDP increased by 0.5% q/q and 2.5% p.a. in Q4 2014, below the long-term average growth rate of around 3.25% p.a. (inflation adjusted and seasonally adjusted), but not much lower than the average GDP growth rate since 2010 (2.7% p.a.).
- China will target economic growth of “around 7 per cent” this year, Premier Li Keqiang told parliament, signalling that the leadership expects the country’s economy to slow further following the slowest expansion for 24 years in 2014. The country, which has enjoyed some of the fastest growth rates in the world in the past two decades or so, is now slowing as it approaches middle-income levels. Mr Li reiterated Beijing’s refrain that economic development has entered “a new normal”
- China's state owned banks are about to begin the painful process of writing off billions of dollars in bad debts, as Beijing seeks to avoid Japanese-style stagnation from a failure to address problem loans. Accounting firms in China are preparing for a spike in bad loans this year and fear it may further destabilise China's already-slowing economy.
- 2014 figures from the Chinese Institute of Certified Public Accountants suggest China has 8,295 accounting firms, 86 more than a year prior, providing services to more than 2,500 listed companies & 4.2 million businesses and government agencies. Only six of these firms have revenue greater than 2 billion yuan ($326 million) and 46 have revenue greater than 100 million yuan.
- Japan’s economy emerged from recession in the fourth quarter of 2014, but even after two years of Abenomics is still struggling for momentum. Overall growth for the year was zero. According to new data, the economy grew at an annualised pace of just 2.2 per cent in the final quarter, well below analyst forecasts. Quarter-on-quarter growth of 0.6% compared with expectations of 0.9%.
- The China affiliates of the Big Four agreed to pay a combined US$2 million as part of a settlement with the US SEC over their failure to produce documents from audits of Chinese companies. But the SEC stopped short of suspending the firms from auditing Chinese companies listed in the US. An administrative law judge called for a six month suspension from such work. In a joint statement, the four Chinese firms said they were “pleased” to have reached the settlement and added that their “ability to continue to serve all their respective clients is not affected by this settlement.”
- China's largest legal practice, Dacheng Law Offices, and multinational law firm Dentons agreed to merge, creating the world's largest law firm, with more than 6,500 lawyers in 50 countries.
- Investing into Asia’s reform landscape: Asia Business Outlook Survey 2015 is an Economist Corporate Network report. It is based on a survey of more than 700 business leaders from across the Asia Pacific region.
- In Singapore, KPMG outlined plans to grow its capabilities in cyber security, energy trading and international tax. The firm says there is a global shortage of talent in these areas and plans to invest $15 million, recruiting 50 new staff with the relevant specialist skills.
- China’s economy grew at its slowest pace in nearly a quarter of a century last year, even as it overtook the US to become the world’s largest in purchasing power terms. The annual expansion of 7.4% in 2014 is the slowest since 1990, when the country faced international sanctions in the wake of the 1989 Tiananmen Square massacre.
- The inaugural Australia Industry Report 2014 provided an overview and analysis of the major economic factors affecting Australia’s industries. It finds that "business services" is now the largest sector in the country and that Australia is well on the way to responding to the 21st century's challenges of the rapid expansion of China, an ageing population and technological disruption.