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Western Press Review: World Economy Interacts From Bangkok To Tallinn

  • Don Hill



Prague, 24 October 1997 (RFE/RL) -- Hong Kong's stock market dive this week splashed a dampener on other markets in Asia and around the world. The spreading volatility attracts Western press commentary on Asia and economic issues.

TIMES: The London stock market suffered its biggest one-day fall since Black Monday

In an analysis today a team of writers describes the London market's ties to Hong Kong's and ascribes financial unrest to fears of currency speculation. They write: "The London stock market suffered its biggest one-day fall since Black Monday -- October 16, 1987 -- as the shockwaves from an overnight crash in Hong Kong swept round the world. (London is) more vulnerable than most to a meltdown in Hong Kong because of extensive British interests and investments in the former colony."

The writers, based in London and Hong Kong, say: "Yesterday's selling was provoked by fears that international speculators, who have already forced devaluations of most other currencies in the Far East, now have the Hong Kong dollar in their sights."

They write: "Hong Kong's leaders stood firm yesterday in defense of the Hong Kong dollar, which has been pegged to the US dollar for the past 14 years and is regarded as the key to the territory's economic success and stability in recent years."

SUEDDEUTSCHE ZEITUNG: One country after the other is falling as it becomes infected with the bacterium of an overheated economic climate

"The Tigers Have Overeaten," says a headline today a commentary by Helmut Maier-Mannhart. The reference is to the sometimes "tiger" economies of Southeast Asia. He writes: "In Hong Kong, share prices have plummeted so steeply that exchanges round the globe have been dragged down with it. In that part of the world where it was once thought that communism would topple in one country after another on the domino principle, it is instead an economic crisis which is tumbling the tiles in a similar manner. One country after the other is falling as it becomes infected with the bacterium which, in its most virulent form, broke out in the overheated economic climate of Thailand."

Maier-Mannhart writes: "What has happened is this: investors flooded the so-called tiger countries of Southeast Asia with capital in the belief that huge rates of growth would yield equivalent profits. In such a bonanza, it does not take long before things get out of proportion and caution flies out the window. The result has been that investment in production capacity and property has outstripped demand. The financial markets stepped up the pace and banks became careless about the quality of their loans."

WALL STREET JOURNAL: Investors in Estonia and Hong Kong have a common concern: fear of speculators

Today, Almar Latour writes from Tallinn, Estonia, that fear of speculators has spread to Europe's northeast also. He says in an analysis: "Investors in Estonia and Hong Kong have a common concern: fear of speculators."

Latour writes in a news analysis that Hong Kong's 10.4 percent fall yesterday was followed by a 15 percent fall in a Tallinn index. He says: "While the skid in Estonia didn't literally stem from the troubles in Hong Kong, the declines for both nonetheless started with currency speculators, real ones in Hong Kong's case and rumored ones in Estonia. Here the stock market plunge occurred amid local talk of a concerted effort by foreign banks to depreciate the kron, which is pegged to the mark."

He says: "Small emerging markets in Central and Eastern Europe are sensitive to any talk of currency speculation, much like the developing markets in Asia and elsewhere."

NEW YORK TIMES: Shared prosperity brings with it shared risk

Donald E. Sanger writes in a news analysis today that the United States has tied part of its prosperity to the Pacific Rim. But, he says, "shared prosperity brings with it shared risk."

He says: "The question now is whether the financial earthquake that started somewhere under Thailand early this summer, and spread to Indonesia, Malaysia and Hong Kong, will end up (in the United States.) Some of the many possibilities being discussed on Wall Street and at the Treasury Department on Thursday were that the United States could become a safe haven for investors who now believe there is no place in Asia to hide -- not even Hong Kong, which Thursday saw the biggest one-day market drop since the killings in Tiananmen Square in 1989. But there is little question that the United States is at risk."

WASHINGTON POST: The currency peg to the dollar has come to be seen as a key symbol of stability and continuity

Keith B. Richburg writes from Hong Kong today: "The explosion of selling today -- which some here already are labeling a crash -- means the territory's main Hang Seng index has lost more than 30 percent of its value this month, and has dropped nearly 40 percent since early August."

He says: "(Yesterday's) stock market panic was caused in part by fears that Hong Kong is next in line -- after Thailand, Indonesia and Taiwan -- to drop the peg and allow its currency to float. But in the more than three months since Hong Kong reverted to rule by China, the currency peg to the dollar has come to be seen as a key symbol of stability and continuity, and of the Chinese leaders' ability to manage a sophisticated, modern economy such as Hong Kong's."

NEW YORK TIMES: Jiang Zemin cannot expect the enthusiastic reception that greeted the last Chinese leader, Deng Xiaoping

The worldwide spread of a kind of financial Asian flu attracted renewed press attention to next week's planned visit of Chinese President Jian Zemin to the United States. The editorial today says: "As Jiang Zemin travels across the United States next week, he cannot expect the enthusiastic reception that greeted the last Chinese leader to make such a public passage through America. When Deng Xiaoping barnstormed through Washington, Houston, Atlanta and Seattle in early 1979, it was just months after Washington had established full diplomatic relations with Beijing for the first time since 1949, and the mood was one of almost euphoric curiosity. Deng's easy spontaneity, identification with market reform and pithy comments charmed American audiences. But Beijing's 1989 military assault on democracy demonstrators in Tiananmen Square reopened American eyes to the dark side of Chinese Communist rule.

The newspaper says: "If Jiang achieves the kind of rapport with (U.S. President Bill) Clinton that has so far eluded him, makes commitments to end China's nuclear and missile cooperation with Iran and leaves with a better understanding of how strongly Americans feel about human rights and religious freedom, the summit meeting will have achieved a minimal success."

DIE WELT: China hopes the summit meeting will bring a normalization of relations

Johnny Erling comments that Jiang is seeking in his U.S. visit to cap a triumphant year Erling says: "A few days before President Jiang Zemin's visit to the United States, which begins this weekend, China's propaganda campaign for better relations with America is running at full steam."

Erling writes: "For the first time since the 1989 Tiananmen Square massacre, the Beijing government has invited correspondents for background discussions. The message they are sending out is that China hopes the summit meeting will bring a normalization of relations with the United States in all areas."

He concludes: "A successful visit to the United States would crown a year of personal triumph for Jiang Zemin. He has led Beijing policy beyond Deng's death without disruption, and he has led a Communist Party congress committing the Chinese system to a market economy."
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