Asian Economic Crisis


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A summarized Presentation by students of SP Jain Center of Management (Singapore/ Dubai) on the Asian Economic Crisis of the late 1990`s

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  • Saurabh Damaini and Vishwesharaya - Would love to have screenings under the S.P.Jain Center of Management in Dubai and Singapore ?

    Film 'JAIN ENLIGHTENMENT - A Cosmic Way of Life' for America and the world

    We have produced a beautiful 10 min DEMO film 'JAIN ENLIGHTENMENT - A Way of Life' and also working on 'Palitana - City of Temples on the Hill' to inform and educate America about Ahimsa, Anekantvad, Aparigrah ... involving Forgiveness, Compassion, and Peace.

    We returned from India with over 200 hours of film and are also producing a series of films on Legend of Lord Bahubali; King Adhinathan, Lord Mahavira and Sacred Pilgrimages - including Ranakpur, Ellora etc. to show Jain Images of Perfection.

    Vinanti Sarkar,Director, Global Cultural Diversity Films (GCDF) Inc. 425 East 51st Street, New York, NY 10022. Tel: 22-759-4568
    Review short clips on 5084696 or 5084856 or 50864417 or 5092260 or 5092316 and join our discussions on blog: ttp:// where we are inviting donors to help in funding and receive free DVDs in return
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Asian Economic Crisis

  1. 1. By: Saurabh Damani & Vishwesharaya
  2. 2. <ul><li>BEFORE THE CRISIS </li></ul><ul><li>Thailand </li></ul><ul><li>Events </li></ul><ul><li>CAUSES </li></ul><ul><li>Effects of the Crisis on Economies in the Region </li></ul><ul><li>IMF </li></ul><ul><li>The Global Impact of the Asian Crisis </li></ul><ul><li>Preventing Future Crises </li></ul><ul><li>Placement time :!!! </li></ul>
  3. 3. <ul><li>Tiger economies – </li></ul><ul><li>Export oriented and Pegged Currencies </li></ul><ul><li>World bank endorses their spectacular growth story </li></ul><ul><li>Growth rates of 7% in 1970s to 9% in 1990s </li></ul><ul><li>Chinese devalue Yuan by 50%,US Dollar appreciate 40% against Yen. </li></ul>
  4. 4. <ul><li>Capital Inflows </li></ul><ul><li>0% export growth in 1996 </li></ul><ul><li>Current Account Deficits </li></ul><ul><li>Carry Trade </li></ul><ul><li>Asset Bubble </li></ul><ul><li>Currency speculation-role of hedge funds. </li></ul>
  5. 5. <ul><li>Thai stock market dropped 75% in 1997 </li></ul><ul><li>By the end of the year, fifty-six Thailand finance houses are closed down. </li></ul><ul><li>Led to first ever devaluation of an Asian Crisis currency </li></ul><ul><li>Devaluations vis-à-vis the dollar average 20% to 30% in Thailand, Indonesia, Malaysia and the Philippines </li></ul>
  6. 6. <ul><li>Seven high-profile bankruptcies of Korean conglomerates, such as Hanbo Steel and Kia Motors </li></ul><ul><li>The Philippines abandons its dollar-peg Overnight interest rates are raised to 32% </li></ul><ul><li>Indonesian authorities close 16 insolvent banks </li></ul><ul><li>Malaysia also abandons its pegged exchange rate </li></ul>
  7. 7. <ul><li>Hong Kong overnight interest rates rise to 280%, </li></ul><ul><li>Hang Seng index fall 23% in three days </li></ul><ul><li>The largest investment bank in Hong Kong, Peregrine Securities, goes bankrupt </li></ul>
  8. 8. <ul><li>The IMF organises a $58.2 billion rescue for Korea </li></ul><ul><li>The IMF puts together a $17.2 billion Thai rescue </li></ul><ul><li>Indonesia finalises a deal with the IMF for funding that could total up to $42.3 billion </li></ul>
  9. 9. <ul><li>Poor Regulation of the Economy </li></ul><ul><li>Over-Inflated Asset Prices </li></ul><ul><li>Macroeconomic Policy: Fixed Exchange Rates </li></ul>
  10. 12. <ul><li>Fall in equity markets, foreign exchange markets and rises in interest rates </li></ul>
  11. 13. <ul><li>Equity Markets </li></ul>
  12. 15. <ul><li>Interest rates </li></ul><ul><li>--- Indonesia 300% … Thailand : tightens monetary policy interest rates peaked at 20% </li></ul><ul><li>Real economy </li></ul><ul><li>--severe contraction in real economic activities </li></ul><ul><li>--increase in corporate bankruptcies </li></ul><ul><li>--devaluation & exports </li></ul>
  13. 16. <ul><li>Financial Assistance : World bank ,ADB </li></ul><ul><li>Fiscal & Monetary policy revision </li></ul><ul><li>Restructuring </li></ul><ul><li>What did it do wrongly? </li></ul>
  14. 17. <ul><li>negative ‘wealth effect’ on investors across the world  Falls in Equity Markets </li></ul><ul><li>International Trade : brake on the growth of exports from the major economies . 5% of GDP in Japan, 1½% of GDP in Europe and 3% in the US . </li></ul><ul><li>Import side : prices slashed </li></ul><ul><li>Foreign Direct Investment : cut back severely </li></ul><ul><li>Economic Growth : constant downward revision of economic growth forecasts </li></ul>
  15. 18. <ul><li>universal tax on currency transactions to deter speculation by the markets </li></ul><ul><li>Improve global regulation, which would involve the IMF, the World Bank and other regulators </li></ul><ul><li>Creating a process of active and transparent surveillance of borrowing nations </li></ul><ul><li>Creating a Code of Best Practice on social policy issues, so that financial crises, if they do occur, do not result in disproportionate increases in poverty within developing countries. </li></ul><ul><li>enhancing regional surveillance :ASEAN </li></ul><ul><li>the provision of fuller economic and financial information to the public by governments, financial institutions, and corporations </li></ul>
  16. 19. <ul><li>Financial contagion </li></ul><ul><li>How does financial contagion occur? </li></ul><ul><li>why is it important, and is there anything that can be done about it? </li></ul><ul><li>What do you think caused the Asian crisis? Do you think the affected countries are now on the right track for recovery? </li></ul>
  17. 20. <ul><li>Following the Asian crisis I would like to ask you whether there are any ways foreign investors/risk managers are able to predict instances of political instability? </li></ul><ul><li>Are the hedging of currencies and the use of credit derivatives viable options to avoid losses in the event of currency crises? </li></ul><ul><li>Asian crisis v/s subprime : similarities and dissimilarities ? </li></ul>