ID :
56640
Tue, 04/21/2009 - 15:42
Auther :
Shortlink :
http://m.oananews.org//node/56640
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EMERGING ASIA CAPITAL MARKETS TO STABILISE, SAYS ADB
By D. Arul Rajoo
BANGKOK, April 21 (Bernama) -- Emerging Asia's capital markets are starting
to stabilise and the region's relatively resilient economies should help them
recover as the global crisis ebbs and investor appetite returns, according to
the Asian Development Bank (ADB).
Nevertheless, the road to recovery for the region's equity, bond and
currency markets will be long and hard given persistent uncertainty about the
length and severity of the current economic downturn, said the Asia Capital
Markets Monitor, a new annual publication from ADB that assesses the status and
challenges for the region's markets.
"Emerging Asia's financial markets were hit harder than expected last year.
But given that many emerging Asian economies will still grow this year while
major global economies contract, Asia's financial markets should do better than
most other regions going forward," said Jong-Wha Lee, head of the Office of
Regional Economic Integration at ADB.
Net equity outflows from the region slowed significantly in the first
quarter of 2009 after a sharp withdrawal of funds in the later half of 2008,
signalling that foreign investors are far less pessimistic than they were about
the region's prospects.
For the full year, net private capital flows to the region will likely
remain positive, although much lower than in 2007 when inflows hit a record
high.
"The recent turmoil in Asia's markets is a reflection of the close
interconnection between markets and economies around the world and underlines
the need for governments and the financial sector globally to continuously
improve regulation, oversight and risk management processes," Lee said.
Emerging Asia's equity prices were down nearly 42 percent on year as of
March 31, with the markets in India, Indonesia and Thailand faring worst.
Over the same period, the Dow Jones Industrial Average lost a smaller 16
percent.
Meanwhile, most emerging Asian currencies fell sharply against the US dollar
due to heightened risk aversion and massive deleveraging.
ADB said that in recent months though, emerging Asian equity markets have
outperformed mature markets, with low valuations starting to attract buyers.
"Offshore funding costs are falling, although they remain elevated by
historical standards. On the local bond market, issuance is set to expand as
governments seek to fund fiscal stimulus packages. That will likely cap gains in
local currency bonds," it said.
Although most Asian currencies are expected to recover somewhat over the
course of the year, further depreciation is possible in the near term amid
continued deleveraging and as weaker exports reduce dollar earnings in the
region.
The report covers 11 economies of emerging Asia -- China, Hong Kong, India,
Indonesia, South Korea, Malaysia, the Philippines, Singapore, Taiwan, Thailand
and Vietnam.
-- BERNAMA
BANGKOK, April 21 (Bernama) -- Emerging Asia's capital markets are starting
to stabilise and the region's relatively resilient economies should help them
recover as the global crisis ebbs and investor appetite returns, according to
the Asian Development Bank (ADB).
Nevertheless, the road to recovery for the region's equity, bond and
currency markets will be long and hard given persistent uncertainty about the
length and severity of the current economic downturn, said the Asia Capital
Markets Monitor, a new annual publication from ADB that assesses the status and
challenges for the region's markets.
"Emerging Asia's financial markets were hit harder than expected last year.
But given that many emerging Asian economies will still grow this year while
major global economies contract, Asia's financial markets should do better than
most other regions going forward," said Jong-Wha Lee, head of the Office of
Regional Economic Integration at ADB.
Net equity outflows from the region slowed significantly in the first
quarter of 2009 after a sharp withdrawal of funds in the later half of 2008,
signalling that foreign investors are far less pessimistic than they were about
the region's prospects.
For the full year, net private capital flows to the region will likely
remain positive, although much lower than in 2007 when inflows hit a record
high.
"The recent turmoil in Asia's markets is a reflection of the close
interconnection between markets and economies around the world and underlines
the need for governments and the financial sector globally to continuously
improve regulation, oversight and risk management processes," Lee said.
Emerging Asia's equity prices were down nearly 42 percent on year as of
March 31, with the markets in India, Indonesia and Thailand faring worst.
Over the same period, the Dow Jones Industrial Average lost a smaller 16
percent.
Meanwhile, most emerging Asian currencies fell sharply against the US dollar
due to heightened risk aversion and massive deleveraging.
ADB said that in recent months though, emerging Asian equity markets have
outperformed mature markets, with low valuations starting to attract buyers.
"Offshore funding costs are falling, although they remain elevated by
historical standards. On the local bond market, issuance is set to expand as
governments seek to fund fiscal stimulus packages. That will likely cap gains in
local currency bonds," it said.
Although most Asian currencies are expected to recover somewhat over the
course of the year, further depreciation is possible in the near term amid
continued deleveraging and as weaker exports reduce dollar earnings in the
region.
The report covers 11 economies of emerging Asia -- China, Hong Kong, India,
Indonesia, South Korea, Malaysia, the Philippines, Singapore, Taiwan, Thailand
and Vietnam.
-- BERNAMA
