UBS Wealth Management reported Tuesday that Asia's overall economic performance in the first quarter of this year was as weak as expected due to weak trade and domestic demand. But there are two signs that the second quarter and the coming quarter will turn to recovery: trade growth and improvements in the semiconductor industry in March, and monetary policy is loosening; moreover, despite the risks of upside-down U.S. Treasury yields, recession is unlikely to occur.
In terms of policy, UBS Wealth Management said that more central banks around the world took a partial stance, and that Asia's looser monetary policy would lead to a moderate recovery in spending. China's easing is maturing but is expected to continue in the future. The Bank expects the People's Bank of China to reduce the deposit reserve ratio once or twice, as economic growth and trade stability remain a major challenge.
The May Investment Asia-Pacific report by UBS Wealth Management Investment Director's Office points out that the prerequisites for a turnaround in industrial production are in place, and the IT sector seems to be leading the rebound. South Korea's semiconductor inventory-to-shipment ratio began to decline in February, and similar trends are expected in Taiwan and Japan as March data are released.
New manufacturing/machine orders are the main leading indicator, and Japan's February data saw an end to the decline since October last year, recording a 3.5% monthly rebound. The report said that more new manufacturing orders from the United States and Germany had been seen; as inventories dwindled, it was expected that producers'pricing power would gradually recover.
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