Saving Graces: Why Net Capital Flows Are Pouring Out Of Rather Than Into East Asia May 08

Standard & Poors, May 2008

Abstract
Economic logic is being turned on its head. Net capital flows should be pouring into East Asia (Indonesia, Malaysia, Thailand, Singapore, Vietnam, Cambodia, Philippines, China, Hong Kong, Taiwan, South Korea, and Japan), but are leaving it instead. While the region still benefits from foreign direct investments, it has recently become an increasingly important source of financing for governments and companies in advanced economies. And nowhere is this more evident than the U.S. Last year, East Asia's net purchases of U.S. portfolio assets amounted to 32.5% the U.S.'s current account deficit. Yet, with the exception of Japan and Singapore, average income in East Asia remains far below U.S. levels (see chart 1). In theory, investments in East Asian economies should yield...

Companies mentioned in this report are:
- Japan (Unsolicited Ratings)
- Hong Kong (Special Administrative Region)
- Malaysia
- Thailand (Kingdom of)
- Korea (Republic of)
- Singapore (Republic of) (Unsolicited Ratings)
- Taiwan (Republic of China) (Unsolicited Ratings)
- China (People's Republic of )
- Indonesia (Republic of)
- Philippines (Republic of the)
- Vietnam (Socialist Republic of)
- Cambodia (Kingdom of) (Unsolicited Ratings)

Standard and Poors RatingsXpress Credit Research provides in-depth coverage of international corporates, financial institutions, insurance companies, utilities, sovereigns and structured finance programs. RatingsXpress Credit Research lets users determine the credit rating of holdings and identify key factors underlying an issuer's creditworthiness, distinguishes the different risk exposures for new and existing deals, and provides an understanding of how their analysts interpret key regulatory, political and environmental events and their economic impact.

Research Type: Commentary
Criteria articles describe the thought process and methodology Standard & Poor's analysts use in determining ratings. These commentary pieces discuss both the quantitative (economic and financial) and qualitative (business analysis and caliber of management) aspects of the analysis, as well as legal issues.

- Japan (Unsolicited Ratings)
- Hong Kong (Special Administrative Region)
- Malaysia
- Thailand (Kingdom of)
- Korea (Republic of)
- Singapore (Republic of) (Unsolicited Ratings)
- Taiwan (Republic of China) (Unsolicited Ratings)
- China (People's Republic of )
- Indonesia (Republic of)
- Philippines (Republic of the)
- Vietnam (Socialist Republic of)
- Cambodia (Kingdom of) (Unsolicited Ratings)

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