Early days

Article Abstract:

Stock markets and currency markets in southeast Asia have been affected by price falls following the devaluation of the Thai baht in Jul 1997. The Philippines, Malaysia and Indonesia have also been affected, and the effect has spread to Hong Kong. These economies suffer from a range of factors such as overvalued currencies, real estate markets that have overheated, and current account deficits. Japan has been hit by concern over exports to these countries, and there is also concern about the impact on other emerging markets in Latin America.

Prices and rates, Foreign exchange, Foreign exchange rates

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The real question

Article Abstract:

Southeast Asian financial markets have been affected by capital inflows which have led to lower interest rates that in turn have encouraged borrowing to buy equities and real estate. The governments of this region should have overfunded budget deficits to tackle the problem, argues NatWest Markets. Fixed exchange rates have also contributed to the problem, and the end of fixed rates means that interest rates are likely to be linked to economic fundamentals. Higher rates would hit stock prices.

Economic policy, Interest rates, Financial markets

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A misreading

Article Abstract:

Southeast Asia may appear to offer good investment prospects because stock prices are falling, but NatWest Securities argues that this view is misleading. A structural change in these economies is likely because their rapid economic growth rates are likely to slow, and this affects stock prices. Growth cannot continue because labor and capital inputs cannot be increased at the same rate. Investors seeking opportunities in the region could look to Singapore.

Economic development

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