How will Asia fare in the next market adjustment?

Andrew Sheng says with 2017 marking the 10th and 20th anniversary respectively of the global and Asian financial crises, among the lessons drawn must be an acknowledgement that in a time of radical uncertainty, it pays to think holistically about the broader trends

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A bank worker gathers Thai baht notes in Bangkok. The devaluation of the baht on July 2, 1997, marked the start of the Asian financial crisis. Photo: Reuters

Published: 12:32pm, 23 Jun 2017Updated: 3:53pm, 23 Jun 2017

April is the cruellest month, so said the poet TS Eliot. But one wit remarked that June marks the end of May. Who would have expected that British Prime Minister Theresa May would lose her majority in Parliament in the June election, which was supposed to strengthen her hand in negotiating Brexit with the European Union?

In sharp contrast, unlike earlier in the year when everyone was worried about France falling to populist rule under Marine le Pen, a fresh centrist candidate named Emmanuel Macron won, and was rewarded by a handsome legislative majority to carry out his promise to reform France.

In Bangkok this week to refresh memories of July 2, 1997, I was struck by how history seemed to rhyme in 10-year cycles. Next month marks not only the 20th anniversary of the return of Hong Kong to Chinese rule, but also the 20th anniversary of the Asian financial crisis, when the baht was devalued. This year also marks the 10th anniversary of the US subprime crisis, which, together with the European debt crisis, caused a decade of low growth for the advanced economies.

On July 19, 2007, the Dow Jones touched a record high of 14,000. It fell below 11,000 on September 15, 2008, following the failure of Lehman Brothers, then fell to a 12-year low of 6,547 on March 9, 2009, recording a 53.2 per cent drop over the period.

Similarly, the Hong Kong Hang Seng Index rose to an all-time peak of 31,958 on October 18, 2007. A year later, it lost 66.6 per cent and fell to a low of 10,676 on October 27, 2008.

Thailand’s ‘Ghost Tower’ a haunting reminder of the 1997 financial crisis

Traders work on the floor of the New York Stock Exchange ahead of the closing bell on June 19. The Dow hit a record peak of 21,528 this week. Photo: AFP

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How will Asia fare in the next market adjustment?

.css-1mniedq{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;}Thailand’s ‘Ghost Tower’ a haunting reminder of the 1997 financial crisis

Thailand’s ‘Ghost Tower’ a haunting reminder of the 1997 financial crisis