The ASEAN tigers: back with a roar?
The efforts ASEAN countries have made in restructuring their economies since the 1997 crisis are paying off, as booming stock markets show. But continuing reform will be needed to keep investors interested.
Sponsored by CIMB-Principal Asset Management Berhad
Since the Asian economic crisis of 1997, the ASEAN nations have been quietly recovering, restructuring and strengthening their economies. They aim to be resilient and well positioned to develop further as Asia becomes the next big growth engine.
The ASEAN markets started 2006 with a bang. On a year-to-date basis, Malaysia’s Kuala Lumpur Composite Index (KLCI) gained 3.2% and Singapore’s Straits Times Index (STI) is up 4.3%. The performances of Thailand’s Stock Exchange of Thailand Index (SET) and Indonesia’s Jakarta Stock Exchange Composite Index (JCI) have been even better, gaining 5.7% and 11.7% respectively. Are the tigers back with a roar? We expect the overall economic picture to remain positive for ASEAN, although equity market performance could differ because of country-specific issues.
Global economic indicators appear to show that the ASEAN economies are set for stronger growth in 2006, boosted by the twin effects of continued global expansion and sustainable growth in domestic consumption. The firm up-trend in the OECD composite leading indicator since June 2005 is already reinforcing this positive view (see figure one).
Expectations of stronger growth in ASEAN will be a boost to regional currencies as concerns about slowing growth and rising inflation ebb.