Asia's 10 biggest economies are also in election year. What a waste. Those economies are heavily dependent on the state to ptrogress. In elections years, untill the faces around the table are known and the positions fixed and firm, economy gringds to a halt.
Poll position
Financial Times; Apr 05, 2004
Investors like to think of Asia as a continent of exporters - a leveraged play on the global economy. But this year Asia is also a continent of voters: today 150m could go to the polls in Indonesia; another eight of the region's 10 biggest economies are also in election year. Ballots concluded show the path is not always smooth for evolving democracies - witness the "magic" bullet that grazed Taiwan president Chen Shui-bian the day before his wafer-thin victory, and the presidential impeachment in South Korea. Yet, bar some knee-jerk selldowns, most markets have proved resilient. Foreign buyers have been largely unperturbed.
This looks bold. Both Taiwan's electoral recount and South Korea's impeachment bring uncertainty, which could delay investment plans - a pillar of the economy Korea in particular needs, given its heavy reliance on trade.
But both also reflect the bigger picture across the region, whereby old enemies are seeing their entrenched and almost cosy stranglehold on politics being challenged by an emerging new guard. That is important since China - a key trading partner for the region - has easier dealings, by and large, with the old guard. The new voices also pose a dilemma for the US, especially in its own election year, when it cannot afford to ignore the democracy-hungry newcomers. Layered on top are the bigger security fears: terrorism, especially in Indonesia and the Philippines, and the nuclear threat of North Korea.
Despite this, markets are flying. Bond spreads in Korea have barely budged since the impeachment - perhaps because the move was the culmination of policy paralysis rather than the start. Nor are investors in Taiwan factoring in a sharp deterioration in cross-straits relations. The Asia ex-Japan universe is trading at around 14 times this year's earnings, below pre-crisis levels but sharply higher than last year. That sits comfortably with a robust global economy but perhaps does not quite factor in the potential for political shocks. |
