Asia tigers are roaring ahead of markets in the west

Asian economies are surging forward despite having to cope with financial and natural disasters beyond those faced by the rest of the world.

Stock markets are outperforming those in the US and Europe – the Indonesian market is 440% ahead of July 1997 levels, with other markets showing significant increases as well.

The Asian markets were tipped in to collapse followed by recession triggered by the devaluation of Thailand’s Bhat, on July 2, 1997.

South Korea is 145% higher, while the Philippines (86%), Malaysia (48%) and Singapore (44%) are all up on 1997 despite suffering large falls in the same way as Western markets in the downturn.

Although bottoming out, China and India have also performed well in recent years. The Shanghai index has nearly doubled (92%) since 1997 and in India, the Bombay exchange has risen by 375%. Both markets were largely unaffected by the 1997 crisis.

This resilience in the face of adversity is leading market analysts to tip investment in emerging economies around the Asia-Pacific rim.

Damian Stansfield, Managing Director, Halifax Share Dealing, said: “The Asian financial crisis of 1997 was triggered by the coming together of conditions that created considerable financial and economic instability in the region.

“A combination of reduced short term interest rates, lower exchange rates and extensive financial reforms have subsequently boosted economic growth. Stockmarket indices in Indonesia, Malaysia, the Philippines and Thailand have all recently touched record highs.

“Many of the policy changes that took place after 1997 have stood the region in good stead during the recent global financial crisis. Whilst much of the global economy suffers from low economic growth, high unemployment and high debt levels, Asian economies have gone from strength to strength.”

The combination of lower interest rates, currency devaluations and financial market reforms has provided the impetus for economic growth in the region since the 1997 financial crisis.

Since 2000, short term interest rates in the South East Asian economies have averaged 4.4%. This compares with an average of 12.8% during 1995-1998 when rates were kept high as authorities tried to maintain the external value of their currencies.

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