September 11, 2013. This presentation I made at the Fellowship Dinner for Chartered Wealth Managers in Manila. The idea of this presentation was to show CWM member, how to look around you and get information. I used Time magazine cover to build the investment climate over the last few years. Second Rule, reduce the use of charts in the investment talks, most investors can not comprehend the X axis and Y axis of a graph in a few seconds and understand the implication. Although, I must admit the pdf version without the relevant talk along with the slides, appears a bit dry.
Bubble Spotting - The East Asia Currency and Debt crisis of 1997Benjamin Van As
During the 1990s, various Eastern Asia economies grew at double-digit figures, and exports grew at well over 10% pa. in some cases.
Then the party ended with a bang as the Currency and Debt Bubble popped, the impact of which could be felt in markets around the world.
This presentation (which forms part of a larger series on Market Bubbles) gives a short overview on what happened.
The Asian financial crisis began in July 1997 in Thailand and spread to other Asian countries, causing stock market declines of 30% and recessions. It was caused by overvalued currencies from large capital inflows and an overreliance on short-term foreign borrowing, which led to currency depreciation and debt defaults when capital fled. While growth slowed, countries recovered through currency devaluations and reforms to financial regulation and oversight. China and other countries in East Asia have since maintained rapid growth through competitive export-led economies and investment in education.
Overview of the Asian currency crisis and the potential for such crisis to occur in other nations including the potential for crisis in the United States. Written in May 2007.
The Asian Financial Crisis began in Thailand in 1997 and spread to other Asian countries, sparking fears of a global economic meltdown. Thailand's currency collapsed under the weight of foreign debt, driving the country into bankruptcy. As the crisis spread, currencies and stock markets declined across Southeast Asia and Japan. The crisis stemmed from inappropriate borrowing by the private sector for speculative investments during a period of strong economic growth. When firms could not repay loans, creditors withdrew funds from the region, placing further pressure on currencies. The crisis exposed weaknesses like overvalued currencies, inadequate financial regulation, and heavy reliance on short-term external debts. Governments and the IMF implemented policies to stabilize currencies and financial systems while addressing rising unemployment and social impacts.
The Asian financial crisis began in July 1997 in Thailand and spread to other Asian countries, raising fears of a global economic meltdown. The crisis started when Thailand floated its currency, the baht, cutting its peg to the US dollar. The International Monetary Fund created bailout packages for affected countries to avoid default, with reforms including austerity measures. The IMF assembled a $17.2 billion rescue package for Thailand as the crisis spread due to countries' over-dependence on short-term foreign funds.
Causes of the 1997 South East Asian Financial Crises & its Impact on the Fina...Krutika Panari
The 1997 Asian Financial Crisis began in Thailand and spread to other Southeast Asian countries as well as Japan, South Korea and Russia. It was caused by currency speculation and excess foreign debt taken on by countries to finance real estate bubbles and investments. When Thailand floated its currency, it collapsed and investors fled the region, causing currencies and stock markets to crash across Asia. The IMF intervened but its austerity measures exacerbated recessions. The crisis had global impacts including the 1998 Russian crisis and LTCM collapse. It reduced confidence in globalization and international financial institutions.
The document discusses the Asian Financial Crisis of 1997-1998. It began in Thailand in May 1997 when the Thai baht collapsed due to speculative attacks. The crisis spread to other Southeast Asian countries such as Malaysia, Indonesia, and the Philippines. The crisis was caused by excess investment in these countries, fueled by export growth, that was financed by foreign capital in US dollars. This left countries vulnerable when their currencies collapsed against the dollar. The crisis had severe economic and political impacts, including falling GDP, high inflation, and the resignation of President Suharto in Indonesia. Countries received IMF support and implemented reforms to stabilize their economies and recover over the following years.
The Asian financial crisis was a period of financial crisis that gripped much of East Asia beginning in July 1997 and raised fears of a worldwide economic meltdown due to financial contagion.
Financial contagion refers to “the spread of market disturbances -- mostly on the downside -- from one country to the other, a process observed through co-movements in exchange rates, stock prices, sovereign spreads, and capital flows." Financial contagion can be a potential risk for countries who are trying to integrate their financial system with international financial markets and institutions. It helps explain an economic crisis extending across neighboring countries, or even regions.
Bubble Spotting - The East Asia Currency and Debt crisis of 1997Benjamin Van As
During the 1990s, various Eastern Asia economies grew at double-digit figures, and exports grew at well over 10% pa. in some cases.
Then the party ended with a bang as the Currency and Debt Bubble popped, the impact of which could be felt in markets around the world.
This presentation (which forms part of a larger series on Market Bubbles) gives a short overview on what happened.
The Asian financial crisis began in July 1997 in Thailand and spread to other Asian countries, causing stock market declines of 30% and recessions. It was caused by overvalued currencies from large capital inflows and an overreliance on short-term foreign borrowing, which led to currency depreciation and debt defaults when capital fled. While growth slowed, countries recovered through currency devaluations and reforms to financial regulation and oversight. China and other countries in East Asia have since maintained rapid growth through competitive export-led economies and investment in education.
Overview of the Asian currency crisis and the potential for such crisis to occur in other nations including the potential for crisis in the United States. Written in May 2007.
The Asian Financial Crisis began in Thailand in 1997 and spread to other Asian countries, sparking fears of a global economic meltdown. Thailand's currency collapsed under the weight of foreign debt, driving the country into bankruptcy. As the crisis spread, currencies and stock markets declined across Southeast Asia and Japan. The crisis stemmed from inappropriate borrowing by the private sector for speculative investments during a period of strong economic growth. When firms could not repay loans, creditors withdrew funds from the region, placing further pressure on currencies. The crisis exposed weaknesses like overvalued currencies, inadequate financial regulation, and heavy reliance on short-term external debts. Governments and the IMF implemented policies to stabilize currencies and financial systems while addressing rising unemployment and social impacts.
The Asian financial crisis began in July 1997 in Thailand and spread to other Asian countries, raising fears of a global economic meltdown. The crisis started when Thailand floated its currency, the baht, cutting its peg to the US dollar. The International Monetary Fund created bailout packages for affected countries to avoid default, with reforms including austerity measures. The IMF assembled a $17.2 billion rescue package for Thailand as the crisis spread due to countries' over-dependence on short-term foreign funds.
Causes of the 1997 South East Asian Financial Crises & its Impact on the Fina...Krutika Panari
The 1997 Asian Financial Crisis began in Thailand and spread to other Southeast Asian countries as well as Japan, South Korea and Russia. It was caused by currency speculation and excess foreign debt taken on by countries to finance real estate bubbles and investments. When Thailand floated its currency, it collapsed and investors fled the region, causing currencies and stock markets to crash across Asia. The IMF intervened but its austerity measures exacerbated recessions. The crisis had global impacts including the 1998 Russian crisis and LTCM collapse. It reduced confidence in globalization and international financial institutions.
The document discusses the Asian Financial Crisis of 1997-1998. It began in Thailand in May 1997 when the Thai baht collapsed due to speculative attacks. The crisis spread to other Southeast Asian countries such as Malaysia, Indonesia, and the Philippines. The crisis was caused by excess investment in these countries, fueled by export growth, that was financed by foreign capital in US dollars. This left countries vulnerable when their currencies collapsed against the dollar. The crisis had severe economic and political impacts, including falling GDP, high inflation, and the resignation of President Suharto in Indonesia. Countries received IMF support and implemented reforms to stabilize their economies and recover over the following years.
The Asian financial crisis was a period of financial crisis that gripped much of East Asia beginning in July 1997 and raised fears of a worldwide economic meltdown due to financial contagion.
Financial contagion refers to “the spread of market disturbances -- mostly on the downside -- from one country to the other, a process observed through co-movements in exchange rates, stock prices, sovereign spreads, and capital flows." Financial contagion can be a potential risk for countries who are trying to integrate their financial system with international financial markets and institutions. It helps explain an economic crisis extending across neighboring countries, or even regions.
The East Asian economic crisis in the late 1990s affected several countries in the region. It was caused by weak domestic policies, global financial liberalization, and speculative attacks on currencies with fixed exchange rates. Thailand was hit first as investors lost confidence in its currency, the baht. The crisis led to sharp declines in currencies, stock markets, and asset prices across Asia. It also had spillover effects globally. The IMF responded by providing loans with conditions for austerity measures, which deepened recessions. Countries have since rebuilt their economies and financial systems to be stronger against future crises.
The Asian Financial Crisis began in Thailand in 1997 and spread to other Asian countries. Thailand had experienced strong economic growth but saw a slowdown in exports combined with rising loan defaults. South Korea's economy was dominated by large conglomerates that borrowed excessively. Indonesia also liberalized financial markets without prudent regulation. The crisis led to currency attacks as investors pulled money out, depreciating currencies. Affected countries had to obtain IMF loans but implement reforms. The crisis had social, economic, political and technological impacts on Asian nations.
Asian Financial Crisis in 1997
Asia before Financial Crisis
Beginning of Asian Financial Crisis
Affected countries from Asian financial Crisis
End of Asian Financial Crisis
IMF role during Asian financial crisis
3 Causes of Asian Financial Crisis
Impact of Asian Financial Crisis to:
Thailand
Philippines
Malaysia
Japan
How these countries overcame the Crisis
Current developments to Avoid future financial crisis
The Asian Financial Crisis began in July 1997 when Thailand floated its currency, the baht, causing its value to drop and triggering a series of currency devaluations and economic turmoil across Asia. The crisis most severely impacted Indonesia, South Korea, and Thailand as their currencies collapsed, stock markets plunged, real estate prices fell, and numerous companies went bankrupt. The International Monetary Fund orchestrated large bailout packages for the affected countries and imposed structural adjustment programs that required high interest rates, spending cuts, and market liberalization to stabilize currencies and restore investor confidence. While most countries recovered relatively quickly, the crisis had long-lasting economic and political impacts on the region.
The document summarizes the social impacts of the Asian financial crisis of the late 1990s. It discusses how the crisis led to rising unemployment and inflation, a decline in real incomes and household assets, and increases in poverty levels. Vulnerable groups like women, children, the elderly and migrant workers were disproportionately affected. Governments, communities, and households implemented various responses and coping mechanisms to deal with the economic hardship caused by the crisis.
This presentation provides an overview of the Asian Financial Crisis of the late 1990s. It discusses the crisis timeline, including Thailand allowing the baht to float in July 1997 which triggered further currency devaluations across Asia. The document outlines weaknesses in Asian economies that were exposed by the crisis, such as weak banking regulation and reliance on short-term capital flows. It also discusses the impact on various countries and regions, including rising interest rates, falling stock prices, and currency depreciation. The presentation concludes with 14 case study questions analyzing different aspects of the crisis.
The document summarizes the 1997 Asian Financial Crisis. It began in Thailand due to a real estate bubble fueled by foreign capital inflows. When the US raised interest rates, capital fled Thailand, forcing the baht to float and devalue sharply. This triggered a financial crisis that spread to other Southeast Asian countries as currency devaluations made foreign debt more expensive. The IMF provided $40 billion in bailout loans to stabilize currencies in affected countries which included Thailand, Indonesia, South Korea, Hong Kong, Malaysia, and the Philippines.
A Case Study Analysis on the Asian Financial Crisis of 1997 and Zapa ChemicalsSadman Ahmed
Asian Financial Crisis of 1997:-
The Asian crisis was one of the worst financial disasters in the history of Thailand. The investors moved away large sums money away, inflation spiraled out of control, and it ultimately put pressure on the exchange rates of the Baht. Due to Thailand’s problems alone, the effect of the crisis spread along different countries in Asia. The impacts prove how integrated the economies of today are. Much of the fault lies on the failed policies of the government and weak regulatory regime.
Zapa Chemicals (risk management)
The exchange rate exposure and the legal hurdles can be quite a burden when transferring funds across the borders. In the case of Zapa Chemicals, the tax filing problem did not help them to transfer funds. They didn’t know when exactly the funds would be available for receiving. The risk management of the firm is quite a hefty task for foreign companies to successfully pursue.
This document provides an overview of the 1997 East Asian Financial Crisis, including:
1. It describes the economic growth and policies of East Asian countries prior to the crisis, known as the "East Asia Miracle".
2. It then outlines some of the key reasons for the crisis, including short-term foreign borrowing by banks and corporations and weaknesses in financial systems.
3. It examines the effects on specific countries, with Thailand, Indonesia, and South Korea being hit hardest by currency devaluations and economic downturns.
4. It also discusses the more moderate impact on countries like China and Singapore and the role of the IMF in providing bailout packages with strict reform conditions.
The document summarizes the Asian financial crisis of the late 1990s. It describes how large capital inflows into Southeast Asian countries in the early 1990s fueled economic booms and real estate bubbles. However, the bubbles eventually burst when foreign investors began pulling money out. This led Thailand to float its currency in July 1997, sparking a financial crisis that spread to other countries through currency devaluations and falling stock markets. The IMF intervened with bailout packages that required economic reforms. The crisis exposed issues with crony capitalism and overreliance on foreign capital inflows in the region.
The Asian Financial Crisis began in July 1997 and severely impacted economies across Asia, including Thailand, Indonesia, South Korea, and other countries. The crisis was triggered by Thailand deciding to float its currency, the baht, causing its value to collapse and spread contagion to other economies. Weak financial systems, liberalization of capital flows, overreliance on foreign capital, and inconsistent economic policies contributed to the crisis by exposing vulnerabilities and causing investors to lose confidence. The crisis represented a failure of many parties to identify risks and prevent the downturn.
This document summarizes a presentation about the metamorphosis of Indonesia's financial crisis since 1998. It discusses:
1) The background of the 1997-1998 Asian Financial Crisis, including macroeconomic, financial, and structural lessons.
2) The phenomena of Indonesia's crisis, including how it evolved from a monetary crisis in 1997 to an economic crisis in 1998 and subsequent social and political crises.
3) How the crisis mechanisms affected both micro and macro economy units in Indonesia and led to a total multi-dimensional crisis with moral, mental, and leadership aspects.
The document summarizes the East Asian financial crisis that began in 1997. It started in Thailand with the collapse of major companies which destabilized the economy. This triggered a rapid withdrawal of foreign funds across East Asia due to concerns over political and economic stability. The withdrawals accelerated into a financial panic. Countries were affected through currency depreciation, high inflation, rising debt, and economic contraction. The IMF provided $120 billion in bailouts but its austerity programs may have worsened the crisis. India was less impacted due to capital controls and strong fundamentals.
The document summarizes the 1997-99 economic crisis in Southeast Asia and its aftermath. It describes the causes of the crisis, including weak macroeconomic fundamentals, overvalued currencies, and an open capital account. This led to currency devaluations, weakened financial institutions, and high unemployment. ASEAN countries responded by stabilizing exchange rates and debt, addressing social impacts, strengthening financial regulation, and increasing economic integration between ASEAN nations. New frameworks like the Manila Framework and Chiang Mai Initiative were created to promote regional cooperation and monitoring of economic conditions.
The document discusses the 1997 Asian Financial Crisis that originated in Thailand and spread to other Southeast Asian countries. It provides background on the "Four Asian Tigers" of high-growth economies prior to 1997. It then describes the events and impact of the crisis in Thailand, Indonesia, South Korea, Hong Kong, Malaysia and other nations. These included currency declines, falling stock markets, GDP declines and the need for IMF bailout packages. Causes of the crisis included easy foreign lending, real estate bubbles, and currency devaluations. The IMF was later criticized for its crisis response of imposing "structural adjustment" measures.
The document summarizes the 1997 Asian Financial Crisis, its causes, and its effects. It discusses several key points:
1) The crisis was caused by hot money flows leaving Southeast Asian countries as US interest rates increased, combined with financial deregulation and property bubbles in the region.
2) Countries like Indonesia were affected as currencies fell sharply against the US dollar, foreign debt became more expensive to pay back, and the IMF's austerity policies exacerbated economic downturns.
3) The crisis had severe socioeconomic impacts on Indonesia like increased poverty, high inflation, business bankruptcies, and currency depreciation weakening manufacturing industries. GDP growth fell sharply and poverty rates rose significantly.
The Asian Financial Crisis began in Thailand in 1997 and spread to other Asian countries. Countries had high debt levels, currency pressures, and collapsed asset prices as foreign capital rapidly pulled out. Thailand, Indonesia, South Korea, and other Southeast Asian countries were most affected. The IMF intervened and provided bailout loans with conditions of austerity measures, which some argue exacerbated recessions. While some countries recovered, the crisis highlighted the risks of heavy reliance on foreign capital inflows and foreign debt.
The document summarizes the 1997 Asian Financial Crisis that affected economies in Southeast Asia. It provides background on the crisis, describing how currency devaluations in Thailand, Indonesia, and other countries led to a loss of over $100 billion from the region. This resulted in high unemployment, falling wages, and corporate and bank failures. A combination of factors contributed to the crisis, including risky private sector borrowing, currency speculation, and weak economic performance. Countries took measures like seeking IMF aid and reforming banking systems to overcome the crisis. The crisis indirectly impacted countries like India through slower global growth and affected Indian exports, while India was shielded by capital controls and a floating exchange rate.
The Asian Financial Crisis began in Thailand in 1997 and spread to other East and Southeast Asian countries. It was caused by currency devaluations due to speculative attacks and a lack of foreign exchange reserves to support the fixed exchange rates. This led to a drop in currency values, stock markets, and asset prices across the affected countries. The IMF played a role in providing loans and surveillance to stabilize currencies and mitigate the crisis's impact. Lessons from the crisis included the risks of excessive foreign debt, unstable capital flows, and the need for international cooperation during financial crises.
The Asian financial crisis began in Thailand in July 1997 and spread to other East Asian countries. Several factors contributed to the crisis, including large current account deficits, asset bubbles, and maturity and currency mismatches in the banking sector. When investors changed their portfolio positions and reduced short-term capital inflows, it sparked a currency crisis and flight to quality. This currency crisis then led to a banking crisis as banks' foreign currency debts increased in domestic currency value. Countries most affected included Thailand, Indonesia, South Korea, and other Southeast Asian nations. The crisis highlighted weaknesses in the Asian banking systems and resulted in recessions across the region.
The Asian Financial Crisis began in Thailand in 1997 and spread to other Asian countries. Countries had fixed exchange rates, large current account deficits, and over-reliance on short-term foreign loans. When the US dollar strengthened, exports became more expensive, growth slowed, and currencies depreciated sharply. This made it difficult to repay foreign debts. The crisis deepened as foreign investors withdrew money and domestic banks refused to refinance loans. Countries turned to the IMF for assistance but austerity measures further damaged economies. The crisis highlighted issues of excessive debt, currency risk, and poor financial regulation.
What Is South East Asian Currency CrisisPujil Khanna
The document summarizes the 1997 Asian Financial Crisis that impacted countries in Southeast Asia. It discusses some of the key causes of the crisis, including excessive foreign borrowing by Thailand, Indonesia, and South Korea which led to large current account deficits. When the US raised interest rates, it caused investors to pull money out of Southeast Asia rapidly, severely depreciating currencies and causing economic turmoil and recessions across the region. The IMF intervened to provide loans and encourage reforms to stabilize economies and currencies.
The East Asian economic crisis in the late 1990s affected several countries in the region. It was caused by weak domestic policies, global financial liberalization, and speculative attacks on currencies with fixed exchange rates. Thailand was hit first as investors lost confidence in its currency, the baht. The crisis led to sharp declines in currencies, stock markets, and asset prices across Asia. It also had spillover effects globally. The IMF responded by providing loans with conditions for austerity measures, which deepened recessions. Countries have since rebuilt their economies and financial systems to be stronger against future crises.
The Asian Financial Crisis began in Thailand in 1997 and spread to other Asian countries. Thailand had experienced strong economic growth but saw a slowdown in exports combined with rising loan defaults. South Korea's economy was dominated by large conglomerates that borrowed excessively. Indonesia also liberalized financial markets without prudent regulation. The crisis led to currency attacks as investors pulled money out, depreciating currencies. Affected countries had to obtain IMF loans but implement reforms. The crisis had social, economic, political and technological impacts on Asian nations.
Asian Financial Crisis in 1997
Asia before Financial Crisis
Beginning of Asian Financial Crisis
Affected countries from Asian financial Crisis
End of Asian Financial Crisis
IMF role during Asian financial crisis
3 Causes of Asian Financial Crisis
Impact of Asian Financial Crisis to:
Thailand
Philippines
Malaysia
Japan
How these countries overcame the Crisis
Current developments to Avoid future financial crisis
The Asian Financial Crisis began in July 1997 when Thailand floated its currency, the baht, causing its value to drop and triggering a series of currency devaluations and economic turmoil across Asia. The crisis most severely impacted Indonesia, South Korea, and Thailand as their currencies collapsed, stock markets plunged, real estate prices fell, and numerous companies went bankrupt. The International Monetary Fund orchestrated large bailout packages for the affected countries and imposed structural adjustment programs that required high interest rates, spending cuts, and market liberalization to stabilize currencies and restore investor confidence. While most countries recovered relatively quickly, the crisis had long-lasting economic and political impacts on the region.
The document summarizes the social impacts of the Asian financial crisis of the late 1990s. It discusses how the crisis led to rising unemployment and inflation, a decline in real incomes and household assets, and increases in poverty levels. Vulnerable groups like women, children, the elderly and migrant workers were disproportionately affected. Governments, communities, and households implemented various responses and coping mechanisms to deal with the economic hardship caused by the crisis.
This presentation provides an overview of the Asian Financial Crisis of the late 1990s. It discusses the crisis timeline, including Thailand allowing the baht to float in July 1997 which triggered further currency devaluations across Asia. The document outlines weaknesses in Asian economies that were exposed by the crisis, such as weak banking regulation and reliance on short-term capital flows. It also discusses the impact on various countries and regions, including rising interest rates, falling stock prices, and currency depreciation. The presentation concludes with 14 case study questions analyzing different aspects of the crisis.
The document summarizes the 1997 Asian Financial Crisis. It began in Thailand due to a real estate bubble fueled by foreign capital inflows. When the US raised interest rates, capital fled Thailand, forcing the baht to float and devalue sharply. This triggered a financial crisis that spread to other Southeast Asian countries as currency devaluations made foreign debt more expensive. The IMF provided $40 billion in bailout loans to stabilize currencies in affected countries which included Thailand, Indonesia, South Korea, Hong Kong, Malaysia, and the Philippines.
A Case Study Analysis on the Asian Financial Crisis of 1997 and Zapa ChemicalsSadman Ahmed
Asian Financial Crisis of 1997:-
The Asian crisis was one of the worst financial disasters in the history of Thailand. The investors moved away large sums money away, inflation spiraled out of control, and it ultimately put pressure on the exchange rates of the Baht. Due to Thailand’s problems alone, the effect of the crisis spread along different countries in Asia. The impacts prove how integrated the economies of today are. Much of the fault lies on the failed policies of the government and weak regulatory regime.
Zapa Chemicals (risk management)
The exchange rate exposure and the legal hurdles can be quite a burden when transferring funds across the borders. In the case of Zapa Chemicals, the tax filing problem did not help them to transfer funds. They didn’t know when exactly the funds would be available for receiving. The risk management of the firm is quite a hefty task for foreign companies to successfully pursue.
This document provides an overview of the 1997 East Asian Financial Crisis, including:
1. It describes the economic growth and policies of East Asian countries prior to the crisis, known as the "East Asia Miracle".
2. It then outlines some of the key reasons for the crisis, including short-term foreign borrowing by banks and corporations and weaknesses in financial systems.
3. It examines the effects on specific countries, with Thailand, Indonesia, and South Korea being hit hardest by currency devaluations and economic downturns.
4. It also discusses the more moderate impact on countries like China and Singapore and the role of the IMF in providing bailout packages with strict reform conditions.
The document summarizes the Asian financial crisis of the late 1990s. It describes how large capital inflows into Southeast Asian countries in the early 1990s fueled economic booms and real estate bubbles. However, the bubbles eventually burst when foreign investors began pulling money out. This led Thailand to float its currency in July 1997, sparking a financial crisis that spread to other countries through currency devaluations and falling stock markets. The IMF intervened with bailout packages that required economic reforms. The crisis exposed issues with crony capitalism and overreliance on foreign capital inflows in the region.
The Asian Financial Crisis began in July 1997 and severely impacted economies across Asia, including Thailand, Indonesia, South Korea, and other countries. The crisis was triggered by Thailand deciding to float its currency, the baht, causing its value to collapse and spread contagion to other economies. Weak financial systems, liberalization of capital flows, overreliance on foreign capital, and inconsistent economic policies contributed to the crisis by exposing vulnerabilities and causing investors to lose confidence. The crisis represented a failure of many parties to identify risks and prevent the downturn.
This document summarizes a presentation about the metamorphosis of Indonesia's financial crisis since 1998. It discusses:
1) The background of the 1997-1998 Asian Financial Crisis, including macroeconomic, financial, and structural lessons.
2) The phenomena of Indonesia's crisis, including how it evolved from a monetary crisis in 1997 to an economic crisis in 1998 and subsequent social and political crises.
3) How the crisis mechanisms affected both micro and macro economy units in Indonesia and led to a total multi-dimensional crisis with moral, mental, and leadership aspects.
The document summarizes the East Asian financial crisis that began in 1997. It started in Thailand with the collapse of major companies which destabilized the economy. This triggered a rapid withdrawal of foreign funds across East Asia due to concerns over political and economic stability. The withdrawals accelerated into a financial panic. Countries were affected through currency depreciation, high inflation, rising debt, and economic contraction. The IMF provided $120 billion in bailouts but its austerity programs may have worsened the crisis. India was less impacted due to capital controls and strong fundamentals.
The document summarizes the 1997-99 economic crisis in Southeast Asia and its aftermath. It describes the causes of the crisis, including weak macroeconomic fundamentals, overvalued currencies, and an open capital account. This led to currency devaluations, weakened financial institutions, and high unemployment. ASEAN countries responded by stabilizing exchange rates and debt, addressing social impacts, strengthening financial regulation, and increasing economic integration between ASEAN nations. New frameworks like the Manila Framework and Chiang Mai Initiative were created to promote regional cooperation and monitoring of economic conditions.
The document discusses the 1997 Asian Financial Crisis that originated in Thailand and spread to other Southeast Asian countries. It provides background on the "Four Asian Tigers" of high-growth economies prior to 1997. It then describes the events and impact of the crisis in Thailand, Indonesia, South Korea, Hong Kong, Malaysia and other nations. These included currency declines, falling stock markets, GDP declines and the need for IMF bailout packages. Causes of the crisis included easy foreign lending, real estate bubbles, and currency devaluations. The IMF was later criticized for its crisis response of imposing "structural adjustment" measures.
The document summarizes the 1997 Asian Financial Crisis, its causes, and its effects. It discusses several key points:
1) The crisis was caused by hot money flows leaving Southeast Asian countries as US interest rates increased, combined with financial deregulation and property bubbles in the region.
2) Countries like Indonesia were affected as currencies fell sharply against the US dollar, foreign debt became more expensive to pay back, and the IMF's austerity policies exacerbated economic downturns.
3) The crisis had severe socioeconomic impacts on Indonesia like increased poverty, high inflation, business bankruptcies, and currency depreciation weakening manufacturing industries. GDP growth fell sharply and poverty rates rose significantly.
The Asian Financial Crisis began in Thailand in 1997 and spread to other Asian countries. Countries had high debt levels, currency pressures, and collapsed asset prices as foreign capital rapidly pulled out. Thailand, Indonesia, South Korea, and other Southeast Asian countries were most affected. The IMF intervened and provided bailout loans with conditions of austerity measures, which some argue exacerbated recessions. While some countries recovered, the crisis highlighted the risks of heavy reliance on foreign capital inflows and foreign debt.
The document summarizes the 1997 Asian Financial Crisis that affected economies in Southeast Asia. It provides background on the crisis, describing how currency devaluations in Thailand, Indonesia, and other countries led to a loss of over $100 billion from the region. This resulted in high unemployment, falling wages, and corporate and bank failures. A combination of factors contributed to the crisis, including risky private sector borrowing, currency speculation, and weak economic performance. Countries took measures like seeking IMF aid and reforming banking systems to overcome the crisis. The crisis indirectly impacted countries like India through slower global growth and affected Indian exports, while India was shielded by capital controls and a floating exchange rate.
The Asian Financial Crisis began in Thailand in 1997 and spread to other East and Southeast Asian countries. It was caused by currency devaluations due to speculative attacks and a lack of foreign exchange reserves to support the fixed exchange rates. This led to a drop in currency values, stock markets, and asset prices across the affected countries. The IMF played a role in providing loans and surveillance to stabilize currencies and mitigate the crisis's impact. Lessons from the crisis included the risks of excessive foreign debt, unstable capital flows, and the need for international cooperation during financial crises.
The Asian financial crisis began in Thailand in July 1997 and spread to other East Asian countries. Several factors contributed to the crisis, including large current account deficits, asset bubbles, and maturity and currency mismatches in the banking sector. When investors changed their portfolio positions and reduced short-term capital inflows, it sparked a currency crisis and flight to quality. This currency crisis then led to a banking crisis as banks' foreign currency debts increased in domestic currency value. Countries most affected included Thailand, Indonesia, South Korea, and other Southeast Asian nations. The crisis highlighted weaknesses in the Asian banking systems and resulted in recessions across the region.
The Asian Financial Crisis began in Thailand in 1997 and spread to other Asian countries. Countries had fixed exchange rates, large current account deficits, and over-reliance on short-term foreign loans. When the US dollar strengthened, exports became more expensive, growth slowed, and currencies depreciated sharply. This made it difficult to repay foreign debts. The crisis deepened as foreign investors withdrew money and domestic banks refused to refinance loans. Countries turned to the IMF for assistance but austerity measures further damaged economies. The crisis highlighted issues of excessive debt, currency risk, and poor financial regulation.
What Is South East Asian Currency CrisisPujil Khanna
The document summarizes the 1997 Asian Financial Crisis that impacted countries in Southeast Asia. It discusses some of the key causes of the crisis, including excessive foreign borrowing by Thailand, Indonesia, and South Korea which led to large current account deficits. When the US raised interest rates, it caused investors to pull money out of Southeast Asia rapidly, severely depreciating currencies and causing economic turmoil and recessions across the region. The IMF intervened to provide loans and encourage reforms to stabilize economies and currencies.
The document summarizes the 1997 Asian Financial Crisis. It began in Thailand due to a real estate bubble fueled by foreign capital inflows. When the US raised interest rates, capital fled Thailand, forcing the baht to float and devalue sharply. This triggered a broader regional crisis, with currency devaluations and economic downturns impacting Indonesia, South Korea, and other Southeast Asian countries. The IMF provided $40 billion in loans to stabilize currencies and support reforms, but the crisis exposed weaknesses in the Asian economic model and financial systems.
The Asian Financial Crisis began in Thailand in 1997 and spread to other Asian countries. Countries had high debt levels, currency pressures, and collapsed asset prices as global capital flowed out. Thailand, Indonesia, South Korea, and other Southeast Asian countries were most affected. The IMF intervened and provided bailout loans with conditions of austerity measures, though their response was controversial and exacerbated recessions. While most Asian economies recovered, the crisis highlighted issues with financial deregulation and dependence on foreign capital inflows.
SOUTH EAST ASIAN CRISIS- OE PART 2 notes copy.pptxPradeep Siribail
The 1997 Asian Financial Crisis originated in Thailand and spread to other Southeast Asian countries such as Indonesia, South Korea, Hong Kong, and Malaysia. The crisis was caused by currency depreciation and heavy reliance on short-term borrowing in foreign currencies in the affected countries. This led to a panic as investors withdrew their money, stock markets collapsed, and property values plunged. The crisis required International Monetary Fund bailouts worth over $100 billion to prevent further spread around the globe.
The document discusses Edward Snowden and his decision to leak classified NSA documents about US surveillance programs. It begins by framing Snowden alongside other whistleblowers who risk persecution to expose government wrongdoing for the public good. It describes Snowden as a former CIA technical assistant and NSA contractor who leaked documents revealing the NSA's extensive monitoring of phone and internet data. The summary discusses how Snowden was faced with continuing his comfortable job or challenging the US government. It praises Snowden's courage in facing criticism to expose freedoms he felt were being unjustly curtailed. It concludes by noting the speculation around Snowden's motives and conduct, with some suggesting his kidnapping by the US could be legal.
Discuss the difference between international finance and domestic finance. Explain the most traded currencies in the world and the reason of their popularity
Presentation talks about the crisis faced by Korea,Indonesia,Malaysia.
Some of the important reasons being BOP Deficits and Inefficient Financial Systems, drop in GDP and increase in Unemployment rate etc.
This document discusses transnational capital flows (TCFs), which refer to large movements of capital across borders. TCFs have increased significantly in recent decades due to factors like growth of sophisticated financial instruments and improved technology. There are several forms of TCFs, including foreign direct investment (FDI), foreign institutional investment (FII), and cross-border lending. While TCFs provided developing countries with investment capital, the volatility of some flows like currency transactions have also caused financial crises, such as the 1997 Asian financial crisis which was exacerbated by short-term foreign borrowing and currency mismatches.
Rajiv Gandhi ignored advice from finance ministers and the RBI in 1988 to seek an IMF loan when warned of future crisis, due to domestic political concerns. By the time he agreed to approach the IMF in 1989, it was too late, and the balance of payments crisis occurred under the new V.P. Singh government in 1991. Interviews with central bank and finance ministry officials revealed that Rajiv Gandhi's delay in seeking IMF assistance due to impending elections significantly contributed to the severity of the 1991 crisis.
The document summarizes the East Asia financial crisis of 1997-1998. It describes the four Asian tiger economies, the pre-crisis economic boom in East Asia, and the triggering events in Thailand that led to a rapid reversal of capital flows across the region. It then discusses the effects on various countries like Indonesia, South Korea, Philippines, Japan, Taiwan, the US, and India. It also covers the role of the IMF, reasons why the crisis was not predicted, and conclusions.
The document discusses current account deficits, global imbalances, and balance of payments. It provides details on Thailand's experience with current account deficits, devaluation of its currency, and liberalization policies during the Asian financial crisis of 1997-1998. It finds that devaluation and liberalization may help correct imbalances if done carefully and not extended beyond stabilization, as Thailand's economy recovered after the crisis through managed float of its currency, liquidation of troubled financial institutions, and debt restructuring. Global imbalances have narrowed since peaking in 2007-2008 during the financial crisis.
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The Asian financial crisis began in Thailand in 1997 and spread to other Southeast Asian countries and Japan. Thailand's currency collapsed after it floated the baht and faced a severe debt crisis. As currencies and stock markets declined across the region, the IMF intervened with $40 billion for Thailand, South Korea, and Indonesia. The crisis exposed weaknesses from high foreign debt, currency pegs, and hot money inflows in these countries. It took over two years for the region's economies to begin recovering.
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Global Financial Update v2
1. WANT TO
KNOW FUTURE?
SURE.
SEPTEMBER 11, 2013
TI EM
SPECIAL REPORT: THE POPULARITY OF CWM DESIGNATION
CHARTERED WEALTH MANAGER
FELLOWSHIP
DINNERSEPTEMBER 11, 2013 MANILA, PHP
10. 19th November 2012
18th January 2013
On November 6 2012, Obama became the first
Democratic president since Franklin D. Roosevelt
to twice win the majority of the popular vote and
being elected as President.
27. Six favored emerging markets
CIVETS
Colombia | Indonesia | Vietnam | Egypt |
Turkey | South Africa
28. Rising Stars
NEXT 11
Bangladesh | Egypt | Indonesia | Iran | Mexico |
Nigeria | Pakistan | Philippines | South Korea |
Turkey | Vietnam.
29. VIEWS
6INVESTMENT
1997 AGAIN?
ASIA
The recent sharp sell-off in emerging
market (EM) debt and currencies has
raised investor concerns that Asia
could see a repetition of the financial
crisis in 1997–1998.
33. ASIA IS IN MUCH BETTER
SHAPE NOW THAN IN 1997
Improvement in
current account
balances
Higher level of
foreign exchange
reserves
Lower
dependence on
external debt
More flexible
currency regimes
34. IMPROVEMENT IN CURRENT ACCOUNT BALANCES
HOW DOES IT HELP ?
Current Account Balance
Net of ‘Exported’ and ‘Imported’
goods and services, plus the net
flow of income from investments
and employment.
A country that runs a current
account deficit (CAD) will
experience a net outflow of
domestic capital to pay for
imports, unless it is able to
finance the deficit by attracting
foreign investments.
financial fundamentals of most Asian economies have seen a
substantial improvement since 1997 (Figure 1). More
specifically, there have been some positive developments
since 1997, which have helped to significantly reduce Asia’s
external vulnerability.
(1) Substantial improvement in current account
balances – One basic measure of the health of a country's
Figure 1
Sharp improvement in current account balances of most Asian
economies since the 1997 Asian financial crisis
-10
-5
0
5
10
15
20
IN ID TH HK CN MY PH KR TW SG
1996 2013F
Current account (% of GDP)
Source: IMF World Economic Outlook Database April 2013, Credit Suisse
vulnerable to capital outflows, while Ch
and the Philippines are least vulnerable.
We favor Asian equity markets with str
external balances and FX reserves and s
overweight on Taiwan and Hong Kong.
see tactical opportunities in China due to
strong surpluses and growth stabilization
We underweight equities in Indonesia
India, given their high external vulnerab
We remain negative on the IDR and
INR and avoid local currency bonds in th
two countries.
Top investment ideas
FX: Stay negative on the IDR and the INR, with
and 12M USD/IDR forecasts at 11,000 and 11
and 3M and 12M USD/INR forecasts at 66.0 a
68.0, respectively. We are positive on the CNY
forecast USD/CNY at 6.10 in 3M and 6.00 in 1
One basic
measure of
the health
of a
country's
external
balance is
the current
account
balance.
1
35. POINT
§ Balance of payments (BoP) in India, Indonesia, Malaysia and
Thailand have deteriorated markedly in recent years.
§ Strong domestic demand in these countries has led to
higher import requirements, while exports have been
sluggish due to weak demand in G3 markets.
§ Foreign direct investments (FDI) in Malaysia and Thailand
have slowed, while residents have become more active in
investing overseas.
§ Consequently, these countries are more vulnerable to capital
outflows due to the smaller buffer provided by the weaker
current account.
36. HIGHER LEVEL OF FX RESERVES
HOW DOES IT HELP ?
Impart of FX reserve
A country with a higher
level of FX reserves
would be able to more
readily supply foreign
exchange to the market
when capital outflows
intensify.
The level of
foreign exchange
(FX) reserves
determines the
extent to which a
country can
maintain stability
in the value of its
currency during
times of capital
outflows.
Singapore and Hong Kong, 3 September 2013
Figure 3
donesia, Malaysia and
ears
Most Asian economies now have a bigger stock of FX
reserves to counter currency weakness
03 05 07 09 11 13
Thailand Malaysia
DP
10
13
23
26
29
38
39
40
83
91
107
0 20 40 60 80 100 120
Indonesia
India
Japan
Korea
Philippines
Thailand
China
Malaysia
Taiwan
Singapore
Hong Kong
Dec-1997 Current
in % of GDP
Source: DataStream, Bloomberg, Credit Suisse
The level of FX reserves
(relative to GDP) in most
Asian economies has
increased significantly
since 1997
2
37. POINT
§ The increase in Indonesia and India’s FX reserves has been
fairly negligible.
§ In the current environment of sluggish export demand and
low inflation pressures, some Asian central banks may be
willing to allow a modest currency weakness to provide
some support to exports and economic growth, and refrain
from aggressively intervening to cap the sell-off in
currencies.
38. LOWER DEPENDENCE ON EXTERNAL DEBT
HOW DOES IT HELP ?
External Debt
External debt (or
foreign debt) is that part
of the total debt in a
country that is owed to
creditors outside the
country.
One factor which aggravated the negative impact of the Asian Financial
Crisis (AFC) was Asian countries’ heavy reliance on external financing.
What happened in AFC?
① In the mid-1990s, Asian companies, banks and governments borrowed heavily
in foreign currency terms, assuming the fixed exchange rate regimes would
hold.
② The borrowed money was in turn invested locally, often in projects with longer
repayment periods (e.g., in real estate and fixed asset investments).
③ When the AFC unfolded in 1997, international creditors were unwilling to roll
over the external debt and demanded their US dollars back, driving a wave of
deleveraging and asset liquidation by local borrowers.
3
39. POINT
§ Asia’s dependence on short-term external financing has fallen
significantly over the past two decades.
§ NOTE - Asia has nonetheless become more dependent on
foreign portfolio flows to help finance investment plans.
§ Equity investments dominated the 2000s, foreign investors fixed
income investments picked up after the 2008 global financial
crisis. However, these fixed income investments are mainly
dominated in local currency.
§ The important factor is that the degree of duration and currency
mismatch in local corporate and official balance sheets has
fallen significantly.
§ As such, the real economic impact of a reversal of capital flows
will likely be smaller compared to 1997.
§ Reduced duration
mismatch.
§ Equity Investment; not
debt.
§ Debt in local CCY.
§ Better duration & FX
management
§ Safer for economy
40. MORE FLEXIBLE CURRENCY REGIMES
HOW DOES IT HELP ?
What happened in AFC?
① Prior to the AFC, economies such as
Thailand, Indonesia and South Korea
adopted fixed exchange rate regimes (i.e.,
exchange rates were fixed against the
USD).
② These countries were forced to abort their
exchange rate pegs abruptly in 1997 due
to the depletion of FX reserves, the values
of their currencies plunged rapidly,
sending severe shocks through financial
markets and the real economy.
4
Figure 4 Figure 5
Asian exchange rates around the 1997 financial crisis Ratio of FX
700
0
100
200
300
400
500
600
94 95 96 97 98 99
Indonesia Korea Thailand Malaysia
USD exchange rate against local currency (1994 = 100)
External v
0
100
200
300
400
500
600
700
800
900
1000
1100
1200
1300
ID
%
Source: Bloomberg, DataStream, Credit Suisse * Refer to Table 1
Source: Bloomb
Figure 4 Figure 5
Asian exchange rates around the 1997 financial crisis Ratio of FX
700
0
100
200
300
400
500
600
94 95 96 97 98 99
Indonesia Korea Thailand Malaysia
USD exchange rate against local currency (1994 = 100)
External v
0
100
200
300
400
500
600
700
800
900
1000
1100
1200
1300
ID
%
Source: Bloomberg, DataStream, Credit Suisse * Refer to Table 1
Source: Bloomb
Figure 4 Figure 5
Asian exchange rates around the 1997 financial crisis Ratio of FX
700
0
100
200
300
400
500
600
94 95 96 97 98 99
Indonesia Korea Thailand Malaysia
USD exchange rate against local currency (1994 = 100)
External v
0
100
200
300
400
500
600
700
800
900
1000
1100
1200
1300
ID
%
Source: Bloomberg, DataStream, Credit Suisse * Refer to Table 1
Source: Bloomb
Figure 4 Figure 5
Asian exchange rates around the 1997 financial crisis Ratio of FX
700
0
100
200
300
400
500
600
94 95 96 97 98 99
Indonesia Korea Thailand Malaysia
USD exchange rate against local currency (1994 = 100)
External v
0
100
200
300
400
500
600
700
800
900
1000
1100
1200
1300
ID
%
Source: Bloomberg, DataStream, Credit Suisse * Refer to Table 1
Source: Bloomb
Figure 4 Figure 5
Asian exchange rates around the 1997 financial crisis Ratio of FX
700
0
100
200
300
400
500
600
94 95 96 97 98 99
Indonesia Korea Thailand Malaysia
USD exchange rate against local currency (1994 = 100)
External v
0
100
200
300
400
500
600
700
800
900
1000
1100
1200
1300
ID
%
Source: Bloomberg, DataStream, Credit Suisse * Refer to Table 1
Source: Bloomb
41. POINT
§ Most Asian countries now adopt a managed float regime,
with varying degrees of currency flexibility across countries.
§ Greater flexibility in exchange rates – even if they are subject
to active intervention by local authorities – should act as
shock absorbers to cushion changes in capital flows and
external financing conditions.
§ The increased two-way movement of exchange rates over
time means businesses in Asia are less complacent about
currency risks and it has also encouraged better currency
hedging practices.
§ Managed float vs Fixed
pegged exchange rate.
§ Greater Flexibility – on
top of matter.
§ Less complacent
42. VULNERABILITY & SAFEST
ASIA IS MANY MARKETS
Which countries are most vulnerable?
① The expected tapering of the US Federal
Reserve's quantitative easing (QE) program
has led to rising US bond yields and a
reversal of the QE-driven liquidity flows into
EM assets in recent years.
② Investment Research (Credit Suisse)
presented an external vulnerability scorecard
– that compares the ratio of FX reserve
relative to each Asian country’s external
financing needs, including the potential risk of
portfolio outflows.
Summary Singapore and Hong Kong, 3 September 2013
ure 4 Figure 5
an exchange rates around the 1997 financial crisis Ratio of FX reserves to potential capital outflows *
00
0
00
00
00
00
00
00
94 95 96 97 98 99
Indonesia Korea Thailand Malaysia
SD exchange rate against local currency (1994 = 100)
External vulnerability assessment (ratio of FX reserves to potential outflows)
0
100
200
300
400
500
600
700
800
900
1000
1100
1200
1300
ID IN MY TH KR HK SG TW PH CN
%
43. POINT § India and Indonesia are most vulnerable
countries in Asia – the ratio of FX reserves
to potential capital outflows for both
countries is less than 100%. This implies
that these two countries do not have
enough FX reserves to maintain a stable
currency in the event that external
financing conditions worsen and capital
flight intensifies.
Singapore and Hong Kong, 3 September 2013
Figure 5
Ratio of FX reserves to potential capital outflows *
External vulnerability assessment (ratio of FX reserves to potential outflows)
0
100
200
300
400
500
600
700
800
900
1000
1100
1200
1300
ID IN MY TH KR HK SG TW PH CN
%
* Refer to Table 1 for a detailed analysis of our external vulnerability assessment.
Source: Bloomberg, Datastream, Credit Suisse
§ The next two weakest countries are
Malaysia and Thailand, although the ratio
of FX reserves to outflows in these
countries is higher at 137% and 227%,
respectively. However, they remain weak
compared to most other Asian countries.
44. POINT
§ The two strongest countries are China and
the Philippines, whose FX reserves are
more than or nearly ten times the size of
potential capital outflows.
§ Taiwan, Singapore and Hong Kong are
also relatively well protected against
external contagion, given their relatively
high ratios of 449%, 426% and 331%,
respectively.
Singapore and Hong Kong, 3 September 2013
Figure 5
Ratio of FX reserves to potential capital outflows *
External vulnerability assessment (ratio of FX reserves to potential outflows)
0
100
200
300
400
500
600
700
800
900
1000
1100
1200
1300
ID IN MY TH KR HK SG TW PH CN
%
* Refer to Table 1 for a detailed analysis of our external vulnerability assessment.
Source: Bloomberg, Datastream, Credit Suisse
45. MAKING THE POINT
4
The latest market data show that redemptions from EM
bond funds have averaged around USD 150 million per day in
recent weeks, with EM currencies of the larger indebted and
deficit countries being the hardest hit, including India,
adding downside risks to economic and earnings growth.
Indonesia entered bear market territory after the Jakarta
Composite Index (JCI) corrected 22% from its year-high,
together with the sharp depreciation of the IDR against the
Figure 6 Figure 7
MSCI Asia Pacific performance since 31 May (in USD) YTD performance of Asian currencies against USD
Performance
-20
-15
-10
-5
0
5
Japan
Korea
China
MSCIAsiaPacific
Australia
HongKong
Taiwan
MSCIAsiaexJapan
Singapore
Malaysia
Thailand
Philippines
India
Indonesia
-17.4
-10.4
-8.2
-7.7
-4.8
-4.2
-4.1
-3.2
-0.1
1.8
-16-15-14-13-12-11-10-9 -8 -7 -6 -5 -4 -3 -2 -1 0 1 2 3 4
USD/INR
USD/IDR
USD/PHP
USD/MYR
USD/THB
USD/SGD
USD/KRW
USD/TWD
USD/HKD
USD/CNY
% returns YTD
Source: Bloomberg, Credit Suisse Source: Bloomberg, Credit Suisse
The latest market data show that redemptions from EM
bond funds have averaged around USD 150 million per day in
recent weeks, with EM currencies of the larger indebted and
deficit countries being the hardest hit, including India,
adding downside risks to economic and earnings growt
Indonesia entered bear market territory after the Jakar
Composite Index (JCI) corrected 22% from its year-hig
together with the sharp depreciation of the IDR against t
Figure 6 Figure 7
MSCI Asia Pacific performance since 31 May (in USD) YTD performance of Asian currencies against USD
Performance
-20
-15
-10
-5
0
5
Japan
Korea
China
MSCIAsiaPacific
Australia
HongKong
Taiwan
MSCIAsiaexJapan
Singapore
Malaysia
Thailand
Philippines
India
Indonesia
-17.4
-10.4
-8.2
-7.7
-4.8
-4.2
-4.1
-3.2
-0.1
1.8
-16-15-14-13-12-11-10-9 -8 -7 -6 -5 -4 -3 -2 -1 0 1 2 3
USD/INR
USD/IDR
USD/PHP
USD/MYR
USD/THB
USD/SGD
USD/KRW
USD/TWD
USD/HKD
USD/CNY
% returns YTD
Source: Bloomberg, Credit Suisse Source: Bloomberg, Credit Suisse
ALTHOUGH THERE ARE
VULNERABILITIES;
ASIA WILL NOT FACE 1997
AGAIN
47. IDEAS
6INVESTMENT
#1
FI: CREDIT, NOT DURATION
In view of current economic environment, do not take
duration mismatch risk, for conservative investors
invest in:
§ 1-3 years duration (Short dated)
§ Good Quality
AA- to BBB financials and
A to BB non-financials (excluding autos)
§ Could consider - CHF, EUR, GBP and USD.
§ Cash will give near-zero yields in most
markets.
§ Debt default rates expected to remain stable in
2014. Corporate bonds of short maturities
offers a reasonable yield pick-up versus cash.
§ After the recent rise in yields, valuations of
medium-term bonds have improved but rate
volatility is likely to remain very high.
§ Conservative investors should continue to
focus on short (1-3 year) investment grade
bonds.
Fixed Income
48. IDEAS
6INVESTMENT
#2
EQUITIES; TAKE PROFIT
§ Global growth is likely to accelerate.
§ The US clearly remains the leader of the recovery and
exposure to the US is the cornerstone of the recovery theme.
§ However, due to increased short-term risks and a strong
performance, take profit in US consumer and US recovery
stocks.
§ European economic data are looking on the positive side.
European stocks may start to look increasingly attractive.
§ Asia, wait & watch.
Equities
§ Take profit on US consumer and US
recovery stocks.
§ Buy M&A stocks.
§ Lookout for European Recovery
Stocks
§ Wait & Watch Asian Equities
49. IDEAS
6INVESTMENT
#3
DIVIDENDS & BEYOND
§ A defensive theme for investors who are interested in
absolute returns and have expectations of relatively high
cash flow disbursements from dividends.
§ Fundamental drivers for equity yield remain
§ However, due to current market environment, be cautious
to Convertibles.
§ Consider taking profit on the emerging market and APAC at
this time due to increased short-term risks.
Equities
§ Selectively buy high-dividend-
yielding stocks and stocks
generating high free cash flow and
hold, but do not add to global
convertibles.
50. IDEAS
6INVESTMENT
#4
GAS & OIL
§ Higher crude oil prices should disproportionately benefit
oil and gas companies with new exploration
technologies or that have interest in unexploited shale
gas, tight oil or deep water oil sources, since these are
becoming increasingly attractive and profitable the
higher the crude oil price is.
§ Due to the volatile market environment, take profit on
this high beta idea at this time.
Equities
§ Take profit on upstream energy
stocks.
51. IDEAS
6INVESTMENT
#5
US REAL ESTATE
§ US homebuilding stocks and real estate investment
trusts (REITs) have underperformed in recent weeks.
§ Rising long-term interest rates were the main trigger for
the drawdown.
§ This sector is expected to provide positive performance,
however, real estate is unlikely to outperform overall
stock markets in such an environment.
§ Selectively, US REITs continue to offer attractive
investment opportunities to investors looking for
defensive dividends.
Alternative Investments
§ Exit listed real estate investments.
52. IDEAS
6INVESTMENT
#6
THE NEW HARD CURRENCIES
§ In the near term, the high volatility of 10-year US yields
is weighing on emerging market currencies.
§ An improvement in the external environment and the
now higher carry should attract renewed capital inflows.
§ CNY still has upside potential, but is nearing a peak.
§ Diversify into only a few selected emerging market
currencies.
Foreign Exchange
§ Hold selected emerging market
currencies funded in EUR, USD or
GBP..
53. IDEAS
6INVESTMENT
ARE GATHERED FROM VARIOUS SOURCES.
Investors should NOT consider this presentation as solicitation for any
investment products. Aprikot is not involved in any business of selling or
buying securities or any investment products. The investment ideas are
personal ideas of the presenter, who is not a broker nor a financial advisor.
Investments carry risks.