Given Asia’s growing participation in international
financial markets, there will be more opportunities for growth but greater vulnerability
to external shocks and market volatility.
While Asian equity markets are not immune
from global financial turbulence, the region has
considerable growth momentum commensurate
with its rising economic weight in the
global economy. Although the region was hit
extremely hard during the recent global financial
crisis, it has rebounded fast. According to
the IMF, Asia’s economic landscape has
changed significantly as the world economy
slowly recovers from the global financial crisis.
Throughout the region, industrial production
has rebounded, financial pressures have eased,
consumer and business sentiment has largely
improved, and strong fundamentals have again
come to the fore. In addition, inflows of syndicated
loans, equity market inflows, and external
equity and bond issues by emerging Asian
economies have returned to pre-crisis levels.
Together, they have contributed to a strong
rebound in the region’s equity markets (IMF
2008). Thus, despite optimism being dampened
by the recent crisis, investor sentiment
about the long-term prospects for Asia remains
positive.