Summers shines in the East

Last week in Asia: a British financial trader marvels at the healing powers of the US Treasury man, whose visit seems to have

AT THE start of last week, most market participants had never heard of Larry Summers, or if they had, were not all aware of his significance in the US Treasury Department. By the end of last week, it was difficult to find a City trader or fund manager who had not heard of the man.

A series of visits to stricken Asian economies, including Thailand, Malaysia and Indonesia, during the past week by a team of IMF officials was preceded by a visit to those same countries by Mr Summers. His agenda has turned out to be disarmingly straightforward - provide a measure of confidence to markets and investors, and at the same time ensure that governments in the region see the absolute necessity of adopting tough IMF policies as the basis for recovery from the trauma of the past months.

Markets have hung on almost every speech during the trip, and a time graph of the week shows a rapid recovery of confidence in the markets he has visited.

As a result of Mr Summers' long shadow, the closure of Peregrine in Hong Kong, and the jitters there later in the week relating to a large property company, were reduced almost to sideshows in the region.

No one is starting to look for a complete recovery in Asia, but a number of commentators have started to "see a bottom", and one important pundit, Morgan Stanley's Barton Biggs, turned vociferously bullish. The Wall Street Journal at the end of the week even carried an article that saw several fund managers recommending cheap Asian bonds; and a fall of more than 200 points on Wall Street last Friday - which a week earlier could have caused all kind of havoc - failed to diminish a steadying of nerves.

Selective buying in Thailand by international investors also became apparent, and London brokers on Tuesday and Wednesday were reported to be net buyers of Asian equity for the first time in many months.

Unit trust investors are still scarce, possibly due to continued redemption fears, but other London-based fund managers have clearly started to look at the region in a somewhat more positive light.

Mr Summer's trip - to Indonesia, Malaysia, Bangkok, Hong Kong, Peking and Seoul over the space of a week - has done more to stabilise investor confidence than almost anything else since the start of this year.

The Deputy Treasury Secretary has acquired the status of a glorified crusader.

By the close of business on Friday, most Asian markets had already started to shift their focus towards the next stage of the "game" - which has the City looking again at Japan.

Many fund managers were starting to digest the impact of a positive statement by the Japanese authorities that led to a 900-point rise in the Tokyo market on Friday. A positive and buoyant Japan would have a big impact on the rest of the region, and analysts are actively sifting through the tea leaves in order to establish whether this latest move is another false dawn or a real break into a recovery phase.

My day-to-day notes:

Monday

Are all my clients lemmings disguised as fund managers?

I went home last Friday thinking that my French contrarian was the only buyer of anything Asian. I get back this morning to find that although HK has collapsed on the news about Peregrine going bust, virtually all my clients want "cheap" offers.

This IMF and US Treasury visit is obviously having an impact. I decide it's time to find out who this bloke Mr Summers really is, and, more importantly, where he is next visiting.

Tuesday

My girlfriend reminds me how lucky I am that I never took a job out in HK last year.

It is no joke, believe me, when hundreds of people start getting axed by the same people that only months ago were shovelling money down their throats. The frightening thing is that it has happened so quickly!

HK makes back most of its loss yesterday, and I am still receiving some buying interest.

Wednesday

This guy Summers is my new hero.

Manila shoots up 95 points today, and Bombay apart (which just had to fall when every thing else is rising!) I can't find any red. The experience of the past six months, however, serves to stop me from going for the bubbly - I think it's better to start my long-delayed savings plan.

Thursday

My French contrarian wants me to send him a copy of my company's balance sheet.

This is a first. I work for one of the largest banks in the world, and my boss mutters something about "signs of the times". Are we in trouble?

At lunch (orange juice and salad after gym nowadays) I hear questions being asked about the financial viability of two competitors. At least they are not talking about my bank.

Indian stocks again under pressure this afternoon, as US fund managers sell the only market that has held up steadily throughout the last two months.

Friday

Japan is up strongly.

I have consistently called this market wrongly this past year, and am therefore reluctant to tell my clients that the Nikkei has turned for real. Our strategist is keen for me to help organise a conference call where we can pass on our view that Japan is turning for real, and that this is good for the rest of Asia. I remind him that this will be the third time in 20 months that we are doing this call. He is not amused.

I find out that Mr Summers is returning to Washington at the weekend. Maybe I should buy some US Treasury stock?

q Gianluca Ricardo is the pseudonym of a City-based financial executive.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksA special investigation by Andy McSmith
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

Jemma Gent: Year End Accountant

£250-£300 Day Rate: Jemma Gent: Are you a qualified accountant with strong exp...

Jemma Gent: Management Accountant

£230 - £260 Day Rate: Jemma Gent: Do you want to stamp your footprint in histo...

Beverley James: Accounts Payable

£22,000 - £23,000: Beverley James: Are you looking for the opportunity to work...

Beverley James: Accounts Assistant

£30,000: Beverley James: A fantastic opportunity has arisen for a person looki...

Day In a Page

HIV pill: Scientists hail discovery of 'game-changer' that cuts the risk of infection among gay men by 86%

Scientists hail daily pill that protects against HIV infection

Breakthrough in battle against global scourge – but will the NHS pay for it?
How we must adjust our lifestyles to nature: Welcome to the 'Anthropocene', the human epoch

Time to play God

Welcome to the 'Anthropocene', the human epoch where we may need to redefine nature itself
MacGyver returns, but with a difference: Handyman hero of classic 1980s TV series to be recast as a woman

MacGyver returns, but with a difference

Handyman hero of classic 1980s TV series to be recast as a woman
Tunnel renaissance: Why cities are hiding roads down in the ground

Tunnel renaissance

Why cities are hiding roads underground
'Backstreet Boys - Show 'Em What You're Made Of': An affectionate look at five middle-aged men

Boys to men

The Backstreet Boys might be middle-aged, married and have dodgy knees, but a heartfelt documentary reveals they’re not going gently into pop’s good night
Crufts 2015: Should foreign dogs be allowed to compete?

Crufts 2015

Should foreign dogs be allowed to compete?
10 best projectors

How to make your home cinema more cinematic: 10 best projectors

Want to recreate the big-screen experience in your sitting room? IndyBest sizes up gadgets to form your film-watching
Manchester City 1 Barcelona 2 player ratings: Luis Suarez? Lionel Messi? Joe Hart? Who was the star man?

Manchester City vs Barcelona player ratings

Luis Suarez? Lionel Messi? Joe Hart? Who was the star man at the Etihad?
Arsenal vs Monaco: Monaco - the making of Gunners' manager Arsene Wenger

Monaco: the making of Wenger

Jack Pitt-Brooke speaks to former players and learns the Frenchman’s man-management has always been one of his best skills
Cricket World Cup 2015: Chris Gayle - the West Indies' enigma lives up to his reputation

Chris Gayle: The West Indies' enigma

Some said the game's eternal rebel was washed up. As ever, he proved he writes the scripts by producing a blistering World Cup innings
In Ukraine a dark world of hybrid warfare and murky loyalties prevails

In Ukraine a dark world of hybrid warfare

This war in the shadows has been going on since the fall of Mr Yanukovych
'Birdman' and 'Bullets Over Broadway': Homage or plagiarism?

Homage or plagiarism?

'Birdman' shares much DNA with Woody Allen's 'Bullets Over Broadway'
Broadchurch ends as damp squib not even David Tennant can revive

A damp squib not even David Tennant can revive

Broadchurch, Series 2 finale, review
A Koi carp breeding pond, wall-mounted iPads and a bathroom with a 'wellness' shower: inside the mansion of Germany's 'Bishop of Bling'

Inside the mansion of Germany's 'Bishop of Bling'

A Koi carp breeding pond, wall-mounted iPads and a bathroom with a 'wellness' shower