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
PROMOTED VIDEO
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
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

Ashdown Group: Market Research Executive

£23000 - £26000 per annum + Benefits: Ashdown Group: Market Research Executive...

Recruitment Genius: Technical Report Writer

£25000 - £35000 per annum: Recruitment Genius: A Technical Report Writer is re...

MBDA UK Ltd: Indirect Procurement Category Manager

Competitive salary & benefits!: MBDA UK Ltd: MBDA UK LTD Indirect Procurement...

Recruitment Genius: Web Developer - PHP

£16500 - £16640 per annum: Recruitment Genius: This fast growing Finance compa...

Day In a Page

Greece elections: In times like these, the EU has far more dangerous adversaries than Syriza

Greece elections

In times like these, the EU has far more dangerous adversaries than Syriza, says Patrick Cockburn
Holocaust Memorial Day: Nazi victims remembered as spectre of prejudice reappears

Holocaust Memorial Day

Nazi victims remembered as spectre of prejudice reappears over Europe
Fortitude and the Arctic attraction: Our fascination with the last great wilderness

Magnetic north

The Arctic has always exerted a pull, from Greek myth to new thriller Fortitude. Gerard Gilbert considers what's behind our fascination with the last great wilderness
Homeless Veterans appeal: Homeless in Wales can find inspiration from Daniel’s story

Homeless Veterans appeal

Homeless in Wales can find inspiration from Daniel’s story
Front National family feud? Marine Le Pen and her relatives clash over French far-right party's response to Paris terror attacks

Front National family feud?

Marine Le Pen and her relatives clash over French far-right party's response to Paris terror attacks
Pot of gold: tasting the world’s most expensive tea

Pot of gold

Tasting the world’s most expensive tea
10 best wildlife-watching experiences: From hen harriers to porpoises

From hen harriers to porpoises: 10 best wildlife-watching experiences

While many of Britain's birds have flown south for the winter, it's still a great time to get outside for a spot of twitching
Nick Easter: 'I don’t want just to hold tackle bags, I want to be out there'

'I don’t want just to hold tackle bags, I want to be out there'

Nick Easter targeting World Cup place after England recall
DSK, Dodo the Pimp, and the Carlton Hotel

The inside track on France's trial of the year

Dominique Strauss-Kahn, Dodo the Pimp, and the Carlton Hotel:
As provocative now as they ever were

Sarah Kane season

Why her plays are as provocative now as when they were written
Murder of Japanese hostage has grim echoes of a killing in Iraq 11 years ago

Murder of Japanese hostage has grim echoes of another killing

Japanese mood was against what was seen as irresponsible trips to a vicious war zone
Syria crisis: Celebrities call on David Cameron to take more refugees as one young mother tells of torture by Assad regime

Celebrities call on David Cameron to take more Syrian refugees

One young mother tells of torture by Assad regime
The enemy within: People who hear voices in their heads are being encouraged to talk back – with promising results

The enemy within

People who hear voices in their heads are being encouraged to talk back
'In Auschwitz you got used to anything'

'In Auschwitz you got used to anything'

Survivors of the Nazi concentration camp remember its horror, 70 years on
Autumn/winter menswear 2015: The uniforms that make up modern life come to the fore

Autumn/winter menswear 2015

The uniforms that make up modern life come to the fore