2017 is a significant year in the history of Asia’s financial markets. It is now 20 years since the devaluation of the Thai baht marked the beginning of a crippling financial crisis that rippled across Asia. It’s also 20 years since Hong Kong returned to Chinese rule, following the handover of the former British colony.
IFR Asia is also 20 years old this year. The first issue came off the presses on March 8 1997, less than four months before the Thai currency crisis hit in earnest. As events unfolded later that year, it’s hard to imagine that any of the people involved in that first issue expected the magazine to reach issue 100 – let alone 1,000.
This commemorative issue is a reflection on IFR Asia’s raison d’être: the growth of the Asian financial markets. It is not, however, an unchecked celebration of the successes of the past two decades, and we make no apology for featuring both highs and lows in these pages.
At a time when Asia’s stock markets are again testing record highs, just as they were 20 years ago, this issue aims to address the two unanswerable questions: How far have we come? And where are we going?
In many ways, Asia has transformed for the better over the past two decades. The region is far richer, vulnerable currencies are no longer pegged to the US dollar, governments have enough foreign reserves to cover short-term liabilities comfortably, and China has emerged as a global economic power.
By other measures, however, the region’s development continues to frustrate. Asia’s local debt markets remain small and fragmented, and the slow growth of institutional capital means many equity markets are still at the mercy of unpredictable retail investors.
The rise of China has also brought with it new challenges. Chinese investors now dominate many Asian capital raisings, to the extent that ‘real’ prices have become hard to ascertain, and mainland volatility has crept into other markets – especially Hong Kong.
Market participants are also facing new challenges to their business models, on both sides of the traditional fence. On the sellside, bankers and underwriters worry about the rise of online finance and their gradual disintermediation, as companies like Alibaba or Tencent expand. Buyside revenues are also under threat from the growth of exchange-traded funds and passive investment strategies, adding to the challenge of justifying investment fees in a low-rate environment.
2017 also brings with it considerable uncertainty for global markets, as Europe wrestles with Brexit negotiations, President Trump turns the US economy inward, and North Korea upgrades its missile technology.
What happens next is anyone’s guess. But if the past 1,000 issues are any guide to the future, it will certainly be interesting.
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