The crisis is a major turning of events in favor of Asia.
As we all know too well, we now live in most interesting times that the Caucasian white man/women has bellied-up the western financial system as we knew it, even as they dictated these excesses to the rest of the world for a decade or more.
It all comes down to this:
When the housing prices in the US, UK, Spain, Australia etc., started rising years ago and then continued in more like a speculative bubble, the authorities where supposed to tame this upward spiral of real assets, this by mandating stricter mortgage loans, as is done with stock margin trading. Instead the western regulators did just the opposite.
Consider what I wrote in an earlier Ts.com member article:
Residential property in the US remains highly leveraged which in our business we call margined. A stock broker margin account in the US is strictly regulated and the maintenance margin requirement set by the Fed Reserve, as I recall. (called Regulation T). As a stock market gets euphoric the Fed increases the margin requirement brokers must ask for, this so to tame speculators. As markets sink beyond some point, the Fed does the opposite, it loosens up, so to help the contraction.
Yet in the US residential property market, lending practices right up to the crisis, just the opposite was allowed to happen.
The more exuberant US home prices got over the past many years, the more lending limits and standards were stretched and loosened, to say the least. Just the opposite what Fed action would mandate in the securities market. Both are a savings instrument and both can and do fluctuate in value. One of these US savings instrument (stocks) is highly regulated regarding margin lending, while the other is not.
The US Fed, under Greenspan's leadership, allowed over years just the opposite to happened. This as compared to what a prudent regulator would do -which is firm-up lending limits in exuberant markets, not loosen them. The biggest asset bubble of all times was so actually nurtured -instead of contained. ***
In time, these dreadful events have only now speeded-up the coming of the rising Asian century. Are you ready? Are you taking advantage of the current turmoil?
We don't have a collapsing currency here in Thailand like the Australian Dollar, which has lost 30% against the US$, since June ’08. This happened strictly due to carry trades which large institutions implemented there, but not here. Whereby, these institutions borrowed in YEN currency at very cheap interest rates, only to then invested in the Aussi $, at a much higher interest rate. It was supposed to be a risk free ride, yet another invention by those speculative gnomes, now all being taken to the cleaners.
As this is now being unwounded due to the global financial crisis, so there is a huge exit on the Aussi $, back home into YEN. So the Aussi $ sinks on top of the Aussi stock market, bull of commodity related counters, now also out of vogue.
Deep value of Thai stocks, real companies for real investors.
Thai stocks as I can select them have high cash dividend payouts, and this is likely to be maintained. In time this is what will bring rational investors back and so stock prices to a more rational level vs. the fire sale prices just now.
Thailand has no sub prime issues, no mortgage defaults, no housing boom-and-bust sector, no bail-outs, no broker or bank failures -and most of all is financially very under leveraged. Thailand does have some well publicized political-up heal just now, but in time this is for the better as they are reducing (already have some) some of the "rotten apples".
I for one remain positive as well as on top Thailand of the cheapest stock market in Asia, it is the second fastest growing economy in the region, after China...and now tumbling global oil prices is a real positive.
Paul A. Renaud.