Asian markets braced for new slump

South-east Asian markets battered by last week's financial typhoon will reopen today facing a period of extreme nervousness, exacerbated by criticisms made at the weekend by Alan Greenspan, the US Federal Reserve chairman, over the handling of the crisis.

Echoing many western investors, Mr Greenspan said current levels of "transparency" were too low and called for international financial institutions to intervene to force the issue.

Addressing a meeting of central bankers in Wyoming, he said the lessons of both the Thai crisis and the earlier difficulties faced by Mexico showed that governments must provide reliable and up-to-date economic and financial information. Mr Greenspan's is the most high profile of a number of criticisms by western financial observers of the handling of the economic problems of the region.

At the same weekend meeting, Stanley Fisher, deputy managing director of the International Monetary Fund, said Thailand could have averted the crisis had it heeded IMF advice earlier: "We were very frank with the Thais. It didn't prevent the crisis. You cannot force a government to take action."

Last week's panic selling of stocks wiped billions of dollars off bourses in Indonesia, Malaysia, the Philippines, Singapore and beleaguered Thailand. Even the normally resilient markets in Hong Kong and Tokyo received a hammering as jittery investors pulled out their funds in what may be a large-scale reassessment of Asian economies.

"We are certainly witnessing the effect of a crisis in confidence amongst investors," said Brett Williams, a senior analyst with Krungthai Thanakit Securities in Bangkok. "There may be a global rethink under way in the markets, and to some extent the falls we saw last week in the South-east Asian region could reflect a real concern that Asia may not be as good a deal as it once was."

The catalyst in this re-think has undoubtedly been the devastating financial crisis in Thailand. Low exports, a badly overstretched banking sector and a slumped property market which has left lenders saddled with more than $70bn in private sector debts, has plunged this once booming Tiger economy into its first recession for more than two decades.

Despite innumerable plans by the country's leadership to halt the decline, none was successful and a humiliating de-facto devaluation of the Thai currency, the baht, was followed last month by the acceptance of a stringent $16bn economic bail-out package agreed with the IMF.

But the package has done little to restore the collapse in investor confidence that preceded it, and financiers are concerned that the problems which led to Thailand's economic malaise may also have the potential to emerge in neighbouring countries.

"At the moment there are only anecdotal signs that things could be wrong," said Mr Williams, "but more scrutiny of these countries' economies may reveal problems not unlike Thailand's just waiting to happen. The market will judge."

This contagion effect, the knock-on of Thailand's woes, may account for much of last week's turmoil on the South-east Asian markets.

Sharing a "risk-group" with Thailand, the other nations and economies of the region may be suffering as a direct result of their neighbour's poor image and failing financial structures.

Analysts separate out Japan and Hong Kong, where different influences - Wall Street in the case of the former and domestic issues in the case of Japan - are seen as more important.

But the rest of Asia has, more or less, moved as a financial entity, a fact repeatedly derided by several governments, most notably that of Malaysia.

The country's outspoken Prime Minister, Mahathir Mohamad, has publicly cursed George Soros, the American financier, for attacking South-east Asian currencies for political reasons.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksA special investigation by Andy McSmith
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Neil Pavier: Commercial Analyst

£50,000 - £55,000: Neil Pavier: Are you a professionally qualified commercial ...

Loren Hughes: Financial Accountant

£45,000 - £55,000: Loren Hughes: Are you looking for a new opportunity that wi...

Sheridan Maine: Finance Analyst

Circa £45,000-£50,000 + benefits: Sheridan Maine: Are you a newly qualified ac...

Sheridan Maine: Financial Accountant

£150 - £190 Daily Rate: Sheridan Maine: One of London's leading water supplier...

Day In a Page

No postcode? No vote

Floating voters

How living on a houseboat meant I didn't officially 'exist'
Louis Theroux's affable Englishman routine begins to wear thin

By Reason of Insanity

Louis Theroux's affable Englishman routine begins to wear thin
Power dressing is back – but no shoulderpads!

Power dressing is back

But banish all thoughts of Eighties shoulderpads
Spanish stone-age cave paintings 'under threat' after being re-opened to the public

Spanish stone-age cave paintings in Altamira 'under threat'

Caves were re-opened to the public
'I was the bookies’ favourite to be first to leave the Cabinet'

Vince Cable interview

'I was the bookies’ favourite to be first to leave the Cabinet'
Election 2015: How many of the Government's coalition agreement promises have been kept?

Promises, promises

But how many coalition agreement pledges have been kept?
The Gaza fisherman who built his own reef - and was shot dead there by an Israeli gunboat

The death of a Gaza fisherman

He built his own reef, and was fatally shot there by an Israeli gunboat
Saudi Arabia's airstrikes in Yemen are fuelling the Gulf's fire

Saudi airstrikes are fuelling the Gulf's fire

Arab intervention in Yemen risks entrenching Sunni-Shia divide and handing a victory to Isis, says Patrick Cockburn
Zayn Malik's departure from One Direction shows the perils of fame in the age of social media

The only direction Zayn could go

We wince at the anguish of One Direction's fans, but Malik's departure shows the perils of fame in the age of social media
Young Magician of the Year 2015: Meet the schoolgirl from Newcastle who has her heart set on being the competition's first female winner

Spells like teen spirit

A 16-year-old from Newcastle has set her heart on being the first female to win Young Magician of the Year. Jonathan Owen meets her
Jonathan Anderson: If fashion is a cycle, this young man knows just how to ride it

If fashion is a cycle, this young man knows just how to ride it

British designer Jonathan Anderson is putting his stamp on venerable house Loewe
Number plates scheme could provide a licence to offend in the land of the free

Licence to offend in the land of the free

Cash-strapped states have hit on a way of making money out of drivers that may be in collision with the First Amendment, says Rupert Cornwell
From farm to fork: Meet the Cornish fishermen, vegetable-growers and butchers causing a stir in London's top restaurants

From farm to fork in Cornwall

One man is bringing together Cornwall's most accomplished growers, fishermen and butchers with London's best chefs to put the finest, freshest produce on the plates of some of the country’s best restaurants
Robert Parker interview: The world's top wine critic on tasting 10,000 bottles a year, absurd drinking notes and New World wannabes

Robert Parker interview

The world's top wine critic on tasting 10,000 bottles a year, absurd drinking notes and New World wannabes
Don't believe the stereotype - or should you?

Don't believe the stereotype - or should you?

We exaggerate regional traits and turn them into jokes - and those on the receiving end are in on it too, says DJ Taylor