FinanceAsia Magazine

Issue: September 2013

Asia on sale

Collapsing currencies and capital outflows have Asians asking are we heading back to 1997?

Asia is a long way from that abyss. Current account surpluses abound, most Asian countries are net creditors and domestic leverage is under control.

The reason why foreigners yanked $3.1 billion out of Asian funds in August is that a recovery in the US has curbed their appetite to take extra risk overseas in the hunt for a bit more yield.

For Asia this outflow is froth compared with the net inflows of $1.6 trillion since 2001, invested in a regional economy that is growing the equivalent of a Germany every four years.

However the foreigners’ flight pattern has ruthlessly highlighted Asia’s weakest links.

It shows that some countries are nearer 1997 than others. China and Singapore do need to reduce leverage in their financial systems, Indonesia should rein in its deficit while India needs a complete overhaul.

In the short term, individual governments can’t and shouldn’t try to bar the exits. Asian politicians’ knee-jerk response of throwing brickbats at the Federal Reserve’s plan to taper its asset purchases isn’t helpful either. Currency intervention will only drain their coffers and baby-step interest rate hikes are largely ineffectual. A big short-term rate hike stands more of a chance.

Investors are pinning their hopes on bold action from the likes of Raghuram Rajan, an accomplished technocrat who takes the helm of the Reserve Bank of India this month, to put Asia’s bad boy, India, back to work.

Countries dealing with the fall out from investors’ exodus could offer each other financial assistance in the form of bilateral swap lines. Bright ministers should also reassure markets of long-term stability and pursue growth-boosting reforms.

Alison Tudor-Ackroyd,
Editor

 

About FinanceAsia Magazine

Established in 1996, FinanceAsia is the leading publisher of financial news in the Asia-Pacific region. Our combination of print and online products provide the latest news, analysis and insight into Asia’s financial markets.

Published monthly from our office in Hong Kong, FinanceAsia magazine provides our readers with the latest financial trends, interviews, features and investigative reports. The publication has a readership of key decision-makers at corporations, governments, investment and commercial banks, institutional investors, asset managers, brokers, traders and financial intermediaries.

Our regular sections include:

Data Story
We look at the key data behind a topical theme in Asian finance, showcased with an array of graphs and tables.

Greenshoe
A monthly opinion column from the FinanceAsia editorial team. We provide our thoughts on a topic making the headlines.

Deal of the Month
Our regular two-page spread with its signature artwork and in-depth analysis examines the equity, debt or M&A deal that we feel has had the biggest impact on the Asian capital markets that month.

Investor Dialogue
For company CEOs and CFOs, what investors think is a critical concern, and in this column we help them understand just this. Each month we speak to a Chief Investment Officer of a top fund and outline their views on corporate governance, what stocks they like and where they expect to generate the best returns.

Soapbox
A monthly opinion piece from a respected author or commentator on Asian business, finance or economics.

People on the Move
Here we summarise the key hires, fires and moves at the region’s banks, highlighting at least one major move each month.

Deal Tracker
We examine the major primary markets deals of the month and comment on the quality of the debt or equity transaction and the secondary market performance.

The Arts of Finance
A light-hearted look at investment opportunities surrounding the arts business in Asia.

 

Print Edition

FinanceAsia Print Edition