[asia-apec 1618] Southeast Asia's Market Slump

[Aaron James]

[Full text can be found in "Economies" at
http://quote.bloomberg.com/newsarchive/]
Southeast Asia's Market Slump, Political Woes Point to Trouble

By David Saunders and Alison Jahncke

Hong Kong, Oct. 13 (Bloomberg) -- Whatever happened to Southeast Asia's
economic recovery? The Philippines, Indonesian and Thai stock exchanges are
among the world's worst performers, their currencies are sliding and their
leaders are in trouble. While those economies have returned to growth since
the Asian crisis of 1997 and 1998, their prospects may now be getting
worse, not better.

That's clearly the case in the Philippines. The peso tumbled to a record
yesterday amid a swelling budget deficit and charges that President Joseph
Estrada took more than $6 million in gambling bribes, prompting the central
bank to raise rates four percentage points. On the same day, the government
cut its 2001 growth forecast and said inflation is set to soar.

"The risks for Southeast Asia going ahead -- and the rest of the region --
are high and building," said David Fernandez, head of Asian economic
research at J.P. Morgan & Co. Sliding markets, cooling global demand for
the region's exports and rising oil prices "are warning signs about growth."

Investors are fleeing. The key Thai, Philippine and Indonesian stock
indexes have lost more than half their value this year. That puts them
among the world's six biggest losers. The rupiah has shed about 20 percent
of its value this year, the peso has slid 17 percent and the baht has
weakened 14 percent.

"The bloom is off Asia -- it's just not the way it used to be," said Bob
Lees, secretary-general of the Honolulu-based Pacific Basin Economic
Council, whose corporate members include Bangkok Bank Pcl and San Miguel
Corp. "I don't see any breakthrough that's going to see billions of dollars
flowing into the region soon."

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Aaron James
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