Indonesia and America drew their own ‘red lines’ for Beijing in the South China Sea last week.
On Friday, Indonesia decided to rename its maritime region in the southwest part of the South China Sea as the “North Natuna Sea,” asserting its own sovereignty in the area.
Meanwhile, America announced that it will step up patrols in disputed South China Sea waters, asserting its willingness to keep the waterway an open sea to all commercial and military vessels.
Indonesia’s and America’s moves come a year after Philippines and its close ally, the U.S., won an international arbitration ruling that China has no historic title over the waters of the South China Sea.
But China continues to think otherwise. It considers the body of water its own sea. All of it, including the artificial islands it has been building in disputed waters, in defiance of international tribunal rulings.
Worse,Beijing has been using softcore and hardcore diplomacy to intimidate anyone who dares to challenge its position. Like threatening Philippines with war should it try to enforce the international ruling. Or like telling Vietnam and India to stop searching for oil in the region, or else it will attack the oil and gas bases.It has also told America’s close Asian ally, Japan, to stay away from its “own” South China Sea.
So far, financial markets in the region have been discounting these developments as “noise,” rather than something more serious, focusing instead on the economic fundamentals of each country. Except the Bitcoin market, which has emerged as the new hedge against global uncertainties.
|Fund||5-day Performance||1-Month Performance|
|ishares MSCI China (FXI)||0.60%||3.29%|
|iShares MSCI Philippines (EPHE)||0.90||-0.44|
|iShares MSCI Indonesia (EIDO)||0.50||1.73|
|Market Vectors Vietnam ETF (VNM)||1.10||4.26|
Source: Finance.yahoo.com 9/3/2017
Still, investors should keep a close eye on the rising tensions in the region, especially as North Korea escalates the testing of new missiles.
On Friday, Indonesia decided to rename its maritime region in the southwest […]