Before August 19, the last time the Sensex index touched 18,400 was just after its all-time peak of January 2008. India’s capital markets had just recorded the country’s biggest IPO and confidence was running high. Of course, the Reliance Power listing proved to be a disaster and the markets collapsed. Is it different this time?
Asia’s debt capital markets enjoyed an impressive rebound in 2009 and continued to build on those foundations in the first half of 2010. Asian sovereigns remain popular international issuers even during a period of renewed turmoil in the European public sector, while global investors have again warmed to Asian high-yield bonds, welcoming a number of deals from the crowded Chinese property market.
When an economy delivers first quarter year-on-year growth of 12%, it seems churlish to moan. Chinese exports grew 48.5% year-on-year in May; the trade surplus is widening; and the latest eye-popping figure for foreign reserves is US$2.44trn. On the face of it, things could hardly be going better.
Since the Asian Development Bank was created in 1966, the multilateral institution has been facing the brunt of criticism from NGOs and wrestling politics with its 67 members. Corruption in the region is deep-rooted and the political situation as always remains volatile. In this kind of environment, the ADB’s ambitions of eliminating poverty from the region and promoting financial and economic integration seem an impossible dream.
Issuers are always looking to maximise liquidity and their issuance options and rating agency Standard & Poor’s has devised a clever new ratings scale that will enable South-East Asian issuers to do just. S&P has developed an ASEAN Rating Scale that enables international investors to compare South-East Asian credits on a like-for-like basis.
This year should be the one in which the key questions about whether the financial crisis is over and whether the recovery is sustainable are answered. The general mood is one of cautious optimism but there are fears about what will happen when government stimulus packages are withdrawn and interest rates start rising in earnest.