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Pakistan's market; theebest performing in Asia

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    Pakistan's market; theebest performing in Asia

    i knew that under musharraf our economy is doing good but I didnt know that we are doing that good.


    _________________________________________
    Too Good to Be True?
    Asia's growth is back, but a slowing U.S. economy and high oil prices are beginning to cause some worry
    By JON E. HILSENRATH
    Staff Reporter of THE WALL STREET JOURNAL


    OK. First the positive scenario.

    Federal Reserve Chairman Alan Greenspan achieves a soft landing in the U.S. economy. Oil prices, lately surging due to tensions in the Middle East, come back down to earth, and the euro gets a life. Economic recoveries in China and Japan gather some steam. Asia's amazing export boom moderates, but not too much. And savings-rich consumers in the region -- even in troubled economies such as Indonesia -- gradually increase their spending as it becomes clear that a U.S. economic slowdown isn't going to knock Asia off a cliff again.

    That's pretty close to the International Monetary Fund's baseline growth scenario for Asia in 2001. It sees Japan growing by 1.8% in 2001, its best performance since 1996, and the rest of Asia growing by 6.6% after surprisingly robust growth of 6.7% this year.

    And why not? Growth rates in Asia's two biggest economies, Japan and China, are up. Long-term futures markets suggest that oil prices will gradually ease below $30 per barrel. And the region's export machine is coming off two banner years after slowing in 1996 and then collapsing during the financial crisis of 1997 and 1998. According to the IMF, Asia is now the world's top supplier of electronic equipment.

    Fernando Zobel de Ayala, chairman of Ayala Land Inc., says the family-run mobile-phone unit, Globe Telecom, has had to turn away new handset subscribers because the mobile-phone market is growing faster than his ability to add capacity. The head of a major Taiwan chip maker says demand is still booming.

    Even if U.S. economic growth slows to a measly 1% in 2001, the IMF figures that will knock just over half a percentage point off of growth in the region.

    Yet a heavy tone of caution hangs in the air around Asia. Call it a new twist on the V-shaped recovery: Asia's economic performance surprised many economists with its vigor in the past 12 months. Now, many are beginning to wonder whether it will surprise with its vulnerability.

    In Japan, corporate investment is up, but signs of a revival in consumer spending are still spotty. In China, the export sector has rebounded, but it masks huge inefficiencies in a slow-to-reform state sector. In South Korea, the export-led recovery has probably peaked, and now the corporate sector's financial woes are returning to the forefront. Taiwan is showing signs of strain during a complicated political transition. In Malaysia, executives worry about tepid foreign direct investment. And in Thailand, credit growth contracted by 9% in August, two years into an economic recovery, because banks still haven't resolved their bad-loan problems.

    Meanwhile, stock markets are down across the region. In Thailand, the Philippines and Indonesia, they are back near crisis levels. In Malaysia and South Korea they aren't very far off.

    So how is one to make sense of it all? Through much of 2000, economists sought to explain the uneven character of Asia's recovery by pointing to a North-South divide. While southern economies such as Thailand, Indonesia and the Philippines struggled, northern economies such as China, South Korea, Taiwan and Hong Kong bounded ahead.

    But that analogy doesn't explain everything. India, Malaysia and Singapore in the south are expected to grow as quickly as or even faster than Hong Kong, South Korea and Taiwan in the north during 2001. This year, the Philippines will post a larger current-account surplus, as a percentage of its total output, than export-oriented China. And South Korea and Taiwan are two of Asia's worst-performing stock markets this year; the best performing is Pakistan.

    Asia's prospects might be better explained by looking at a range of more subtle divides that cut across the region.

    The first divide is in exports. Many of Asia's best-performing economies in 2000 -- South Korea, Taiwan, Singapore and Malaysia -- are highly exposed to the semiconductor and electronics cycle. If global demand for Asia's electronics exports holds up in 2001, then these economies will almost certainly have another year of robust economic growth.

    Executives in many of these economies are betting it will happen. Omni Industries Co. of Singapore, for instance, is tripling its capacity in China and opening a plant in Mexico to fill orders from multinationals such as Hewlett Packard Co.

    But the evidence for robust global demand isn't so promising anymore. By midyear, the Organization for Economic Cooperation and Development's leading economic indicator -- a good predictor of Asia's export cycles -- fell for two straight months after rising through much of 1999 and 2000. U.S. orders for electronic equipment have also shown signs of waning. And most recently, a slew of profit warnings from the U.S. have some wondering if the export boom is set to slow significantly. That could leave the region's electronics makers with a big problem if capacity comes on line too quickly.

    The second divide is a banking divide, the ugly residue of the financial crisis that was easily overlooked in some places during a period of export-led and equity-financed growth in 2000. As the economic environment becomes more challenging in 2001, and as exports offer less of a boost, economies with the strongest financial systems, like Hong Kong and Singapore, are likely to perform the best.

    That might not seem obvious at first glance, since bank lending hasn't played a big role in the region's recovery so far. But just look back at Malaysia and Thailand for some evidence. When Asia fell into financial crisis, the Malaysian government set up a bad-debt agency that rapidly, though some argue inefficiently, took the bad loans off of the balance sheets of Malaysian banks. The Thai government has allowed Thai banks to work bad-loan problems out for themselves.

    "It's important that you resolve bank problems quickly, even at the risk of bailing out people who don't deserve to be bailed out," says Princeton University economist Paul Krugman.

    Malaysia today is seeing some payoff for its clean-up. Loan growth at Malaysian commercial banks rose by 3% in the 12-month period ending in August. By contrast, Thai banks have seen loan volume fall for three straight years as they struggle to clean up what at midyear amounted to 1.6 trillion baht (about $35 billion) of non-performing loans.

    South Korea, on the other hand, cleaned up its banks in a style similar to Malaysia during the crisis, but it left a mountain of problems with investment-trust companies. The result: Banks are lending again but many economists worry that its financial woes haven't yet been resolved. Debt still outstrips equity by a two-to-one margin on the balance sheets of many large Korean conglomerates.

    Third, there is a political divide, which has set Indonesia and the Philippines apart in 2000 as the region's laggards. Political uncertainty and concerns about corruption have made it increasingly difficult to attract foreign investment into these economies, it has hampered consumer confidence and it has slowed the reform of institutions needed to get these economies functioning smoothly again.

    Mr. Krugman argues that Asia has fallen so hard already that it would be difficult to argue that it is about to head into another crisis. Yet the year ahead could prove to be much trickier to navigate than the most optimistic scenarios suggest.


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    unity, faith, discipline
    Pakistan Zindabad

    #2
    Hmmmmmmmmmm this is interesting! where did you get it from or is this just a proud pakistani swelling with pride(and swelling with false)

    Comment


      #3
      ProudPakistani although the article is about Asia as a whole, its great news to hear that we have the best performing stockmarket in Asia!

      [This message has been edited by Malik73 (edited October 26, 2000).]

      Comment


        #4
        Another slap in the face for doom-mongers in the Pakistani national press. How many journalists have been quick to jump on the bandwagon to criticise Musharraf for not improving Pakistan's economy more quickly, yet we can see that it is a slow period worldwide, and Pakistan's stock market is actually performing the best according to this report.

        I hope they report that in Dawn amongst their stories of honour killings and public depression...

        Comment


          #5
          Salaam,
          It Just refers to the stock market. Which, compared to last year, is certainly doing well but is a very poor indication of the actual economy. Anyways, i don't wanna be the prophet of "gloom" here. It would be great if you would include the actual link to this article.

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          Na Hota mein, Tu Kya Hota
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          Comment


            #6
            The article is from The Wall Street Journal. I thought it was clear enough as it said on the top that the author wrotes for the Wall Street Journal.

            ------------------
            unity, faith, discipline
            Pakistan Zindabad

            Comment


              #7
              Originally posted by proudpakistani:
              The article is from The Wall Street Journal. I thought it was clear enough as it said on the top that the author wrotes for the Wall Street Journal.

              GOOD ANSWER!!!

              Comment


                #8
                I know it says that it was written in the wall steer journal, 'cause it says so on the top. And please we are not in a competition for better answers here so stop it with the siege mentality. My intention is in no way to argue i just wanted the actual link to the website where u copied from ..


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                Na Hota mein, Tu Kya Hota
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                Comment


                  #9
                  u have to pay to access wall street journal on web.

                  Comment


                    #10
                    Ullu mian,
                    hahah thanks. After posting the reply I went to their site and figured it out. Yes indeed we have to pay, so i won't ask for any more links

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                    Na Hota mein, Tu Kya Hota
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                    [This message has been edited by Wadi (edited October 30, 2000).]

                    Comment


                      #11
                      It is doing better than before, and thus is the best market as it is growing after the 1998 sanctions and stuff.
                      But our economy is still weak.
                      We need more fundamental and stable infrastructure like the development of the ports.
                      Now that is good for our economy.
                      But for now we will have to wait till the next budget to see how much better we are from before.
                      WE MUST HAVE A 5% GROWTH RATE!!!!

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                      CROIRE A L'INCROYABLE
                      You can't fix stupid. So might as well troll them!

                      Comment

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