Channel News Asia: Business leaders optimistic about growth prospects in emerging Asia

SINGAPORE: Concerns over the winding down of bond-buying programmes in the US have triggered a sell-down in Asian equities and weakened currencies in emerging Asia this week.

But some business leaders remain optimistic about the region’s growth prospects.

Speaking to the media at a Network ASEAN Forum event, CIMB Group CEO Nazir Razak said he expects regional currencies to return to a “more normal level”.

Most emerging market currencies in Asia retreated on Thursday on expectation that the US will start rolling back stimulus measures as early as next month.

The Indian rupee sank to record lows while Indonesia’s rupiah fell to a 4-year low. The same happened with the Malaysian ringgit, which hit its lowest in three years.

Mr Nazir said: “This is something that should have been expected. Currencies will go through bouts of volatility in this kind of environment, and then they will get back to a more normal level.”

Mr Nazir added that some companies may have difficulty with higher interest rates and the capital outflows from Asia.

He said: “The analogy to me is that we were all invited to a party. We went to the party, we always knew the party would end. You called it hot money, we knew it was hot. So the question is: when you went to the party, did you drink too much? Are you going to wake up with a hangover?”

“I think there will be volatility and there will be segments of some people that have difficulty, but overall the momentum of growth, the fundamentals are there,” he added.

Patrick Walujo, managing director of Northstar Pacific Partners, said: “This market volatility is a good correction for people to pause and reflect… the factors that underpinned the market sentiment in the past year or two are not sustainable and the private sector, governments can take this opportunity to really look at their strategies.”

One area of focus is the push for an integration of ASEAN economies by 2015.

Mr Walujo said key regional business leaders are due to convene in Singapore for the inaugural Network ASEAN Forum on Friday to find solutions to enable freer trade in six sectors.

They include aviation connectivity, infrastructure, power and utilities, capital markets, financial services, and healthcare.

Mr Nazir said that while improvements to ASEAN integration have been made, there is still “insufficient critical mass support” and more can be done. He hopes governments in ASEAN can provide greater clarity on what can be achieved in 2015.

A list of policy recommendations is expected to be presented to policy makers in ASEAN after the forum.