Fifteen years ago South-East Asia’s economies were known as tigers, but that all changed in 1997 when the first wave of the Asian financial crisis struck. South-East Asia was particularly badly hit and it has been a slow march back to credibility and prosperity. Now, in 2008, there is a sense of déjà vu about the economic outlook. The difference being that this time it is the US economy teetering on the brink of a recession and the international banks that are responsible for lobbing the US dollar credit markets into the deep freeze. The...Read more
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A decade ago South-East Asia was in economic freefall. Jobless and hungry migrants fled cities for the sanctuary of their villagers. Bankrupt middle-class families sold their silver, leaving used-car lots jammed with fully loaded BMWs and Mercedes. Talk was of Indonesia heading down the same grim road as Yugoslavia.
Since the 1997-1998 Asian financial crisis South-East Asian governments have accepted the dangers of offshore borrowing and have been working hard to develop local bond markets. This is bearing fruit as the increase in domestic market volume show and, tellingly, these markets have remained open even as the US sub-prime crash has effectively shut the G3 market.
Days are not so sleepy for the secretariat of the Association of South-East Asian Nations (Asean) in Jakarta since its 10 members signed up for an economic community last November in Singapore. It was a bold, but unavoidable, move. But is it another round of empty rhetoric or is the group going to make good on its promises for once?
Thailand is looking more attractive as an alternative source of funding as the newly elected government is expected to put more impetus into boosting its domestic debt capital markets, with more foreign debt issuers as a key prong in that direction.
The US sub-prime turmoil has cast something of a shadow over Asia’s leveraged buyout market. However, bankers are optimistic that the Singapore leveraged market will remain alive despite the wobbles in global credit markets. Some bankers are even predicting 2008 will be a record year for Singapore buyouts.
Malaysia, surprising as it may seem, is by some measures the world's biggest Islamic financial centre, thanks to a strong push from the government and banks since 1983. The market's vitality has a strong local flavour but adding some cosmopolitan spice is going to be crucial if Malaysia is going to retain its zest. This year could be the tipping point.
Vietnam’s capital markets have grown strongly in recent years, but 2008 could bring only modest gains if the credit crisis spoils appetite for a string of planned bond, loan and equity deals.
The Republic of Philippines is preparing to issue warrants that will allow holders of certain of its dollar and euro public debt to put the paper should the country default on its offshore debt. This move is yet another piece of the country’s remarkable transformation from financial pariah to slick operator.
These are tough days for the Asian Development Bank’s infrastructure finance team. The credit crisis is ripping through the region, causing loan pricing to rise and draining banks of liquidity. Financing volumes could drop sharply this year and the ADB is working hard to ensure that does not happen.