LIVEMINT

Here are the people, places and events that accessorized Asia’s year. Drum roll, please!

Dec 22 2017

William Pesek

Warren Buffett wanted nothing to do with bitcoin in 2017, yet his name kept getting dragged into its epic rally.

One reason: the Sage of Omaha is a long-time critic of the cryptocurrency market, dismissing it as a “mirage” and cautioning investors to “stay away from it”. Another: the market value of digital cash instruments exceeded that of his Berkshire Hathaway Inc. in the waning days of the year, a sign that, at least for now, bitcoin’s appeal is no illusion.

Buffett’s cameo in the year’s biggest investment craze is eminently fitting, given that he’s the inspiration for my annual Nude Emperor Awards. Specifically, his fabled observation about investment risk: “You only find out who is swimming naked when the tide goes out.” And 2017 saw a bull market in nakedness—national leaders caught skinny dipping, corporate chieftains exposed for cluelessness, economies losing their mojo and manias laid bare. So, here are the people, places and events that accessorized Asia’s year. Drum roll, please!

Cognitive Dissonance Award: To bitcoin bulls rushing headlong into a mania that makes the 17th century Dutch tulip bubble seem tame. This get-rich-quick ethos conflicts with a rally that defies gravity and logic and contradicts Buffett’s never-invest-in-what-you-don’t-understand adage. The blockchain technology beneath bitcoin has great promise. The exploding valuations closing in on Microsoft Corp.’s market valuation, essentially in just 12 months? Not so much.

Big Shot Award: To Rodrigo Duterte, the Philippine president whose bloody war on drugs has filled more body bags in 540 days than dictator Ferdinand Marcos did over 20 years (around 7,000). Oddly, Duterte’s campaign isn’t shooting South-East Asia’s No. 4 economy in the foot just yet. On 11 December, Fitch upgraded Manila citing strong growth. Still, the optics are as dreadful as they are dangerous for an economy that only ascended to investment-grade status four years ago.

Taxing Decision Award: To Narendra Modi, the Indian Prime Minister whose glitch-ridden goods and services tax (GST) rollout echoed last year’s demonetisation fiasco. Not what voters might’ve expected from the man famed for competence and getting big things done. Modi’s promises for the smooth rollout of a “good and simple tax” became a punchline as confusion reigned and disruptions blindsided businesses expecting more from a leader elected to increase productivity and efficiency.

Tech Milestone Award: To Tencent Holdings Ltd, which became the first Asia technology outfit to blow past the $500 billion market cap threshold. Jack Ma’s Alibaba Group Holding Ltd may get the headlines, but the Shenzhen juggernaut Ma Huateng co-founded in 1998 and its ubiquitous WeChat mobile platform has Asian titans looking over their shoulders. Tencent’s stock rallied a mind-blowing 100%-plus in 2017, angling for additional gains on 2018.

Deep Pockets Award: To SoftBank Group Corp.’s Masayoshi Son, who invested seemingly everywhere imaginable in 2017. Only time will tell if his multi-billion bets on Uber, China’s Didi Chuxing, South-East Asia’s Grab, India’s Flipkart, US private-equity giant Fortress Investment and myriad others smacked of genius or hubris. Son also got some grief for inflating tech valuations. But kudos to him for breaking the conservative Japanese mould. Japan, and Asia more broadly, needs more such visionaries.

Tin Cup Award: To Donald Trump, the US President whose massive tax cut plan relies on the goodwill of his Asian bankers. America may have built a huge and productive economy, but Asia holds the mortgage. China and Japan alone hold a combined $2.3 trillion-plus of US Treasurys. Trump’s $1.5 trillion tax cut presumes Beijing, Tokyo and other Asian governments will dutifully add to their dollar exposure. It’s a dangerous assumption.

Rocket Man Award: To Kim Jong Un, the North Korean leader who ran circles around Washington, laying bare Trump’s “fire and fury” bombast and the limits of Beijing’s ability to curb his nuclear ambitions. “Little rocket man,” as Trump calls him, even has the White House hinting US athletes might not compete at February’s Olympics in PyeongChang, South Korea.

Out of Control Award: To Japan Inc., which saw a bull market in quality-control scandals in a nation obsessed with excellence. The parade of shame included Kobe Steel, Mitsubishi Materials, Nissan Motor, Subaru Corp., Toray Industries and others. Toshiba Corp.’s woes made headlines throughout the year, as did Takata Corp.’s deadly airbags. The last 12 months were a stark reminder that for all Prime Minister Shinzo Abe’s talk of a “new Japan,” too much of the old remains.

Nude Emperor Award: To Xi Jinping, the Chinese leader who emerged from the 19th Party Congress with oddly contradictory plans for the second biggest economy. On the one hand, he emerged stronger than ever and promised total Communist Party control over all walks of life. On the other, he pledged to give market forces a central role in Beijing’s policy mix. Make sense? More likely, it raises concerns that China’s growth strategy in the year ahead has no clothes.

William Pesek, based in Tokyo, is a former columnist for Barron’s and Bloomberg and author of Japanization: What the World Can Learn from Japan’s Lost Decades.

His Twitter handle is @williampesek

First Published: Fri, Dec 22 2017. 03 24 AM IST

 

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