Two points from this article caught my eye (see below) and my thoughts simply are:
1. If the Thailand, Indonesia and the Philippines are all embarking on this massive infrastructure spending, where will they get the resources from? Which construction co’s will benefit? By how much will land prices appreciate in those areas?
2. If sovereign wealth funds are treating equities as a form of fixed income, isn’t this just a disaster waiting to happen? Or is it improved investor education?
Appetite for sovereign debt is cooling just as Southeast Asian governments speed up construction plans in response to slowing growth in China and stuttering recoveries in Europe and Japan. Indonesian President Joko Widodo has added 100 trillion rupiah ($7.7 billion) of spending on projects including ports and power plants in his 2015 budget, Thailand’s military rulers are accelerating outlays on rail and roads and Philippine President Benigno Aquino is relying on new infrastructure to increase growth to 8 percent in his last two years in office.
“Bonds right now are just digging a big hole for me,” Vergara said in a March 11 interview in Manila. “As we approach the 20 percent threshold, we want to ask for an increase in the weighting that we can have in equities.”