Yang Jing was stunned by these words, and then he smiled bitterly and shook his head.
What David said was right. In 1996, there was a total of about 7 trillion US dollars of international hot money in the world. However, the funds owned by KY Investment Fund accounted for more than one-tenth of this huge amount of international hot money, making it definitely the biggest giant on Wall Street!
"Boss, I actually share the same judgment as you do. Although several Southeast Asian countries have developed rapidly in recent years, they still have many loopholes. Don't be fooled by the emergence of the Four Little Dragons in East Asia. That is just superficial prosperity. Behind the scenes, the Southeast Asian countries represented by the so-called Four Little Dragons, as well as their domestic financial systems, have fatal loopholes."
After a pause, David began to talk.
"In fact, it is not just the Southeast Asian countries. Almost all countries in East Asia, except China, have loopholes of one kind or another. This is caused by the economic structure of Asia after the war. Countries and regions such as Singapore, Malaysia, Thailand, Japan, South Korea, Taiwan and Hong Kong are all export-oriented countries. They are highly dependent on the world market. As long as the Asian economy is shaken, there will inevitably be a situation where one hair moves and the whole body moves."
"First, the 'export substitution' model is an important reason for the economic success of many Asian countries. The so-called Four Asian Tigers are typical representatives of this economic model. However, this model also has three shortcomings: first, when the economy develops to a certain stage, production costs will increase, exports will be suppressed, and these countries will suffer from an imbalance in their international payments; second, when this export-oriented strategy becomes the development strategy of many countries, they will squeeze each other; third, the step-by-step improvement of products is a necessary condition for continuing to implement export substitution, and it is impossible to maintain competitiveness by relying solely on the cheap advantage of resources. After achieving rapid growth, these Asian countries did not solve the above problems."
"Moreover, most of these countries are developing countries, and maintaining a high economic growth rate is the common desire of developing countries. However, when the conditions for high-speed growth become insufficient, in order to continue to maintain the speed, these countries have to turn to borrowing foreign debt to maintain economic growth. However, due to the unsuccessful economic development, some Asian countries have been unable to repay their debts since the past two years. In Southeast Asian countries, the bubble blown up by the real estate has only resulted in bad debts and doubtful debts of bank loans; as for South Korea, since it is too easy for large companies to obtain funds from banks, once the company is in poor condition, the non-performing assets will immediately expand. The existence of a large number of non-performing assets, in turn, affects the confidence of investors. This is... overdraft economic high growth and the expansion of non-performing assets! This is an extremely dangerous thing!"
"But the economic market systems in these countries are immature. On the one hand, the government intervenes too much in resource allocation, especially in the loan allocation and projects of the financial system; on the other hand, the financial system, especially the regulatory system, is imperfect. This will lead to the further expansion of those risks and eventually become the last straw that breaks the camel's back."
Once David Anderson gets into his own mode, he can always hit the nail on the head.
Yang Jing nodded slightly and said, "David, so what you mean is that there are indeed some huge signs of crisis hidden in the Southeast Asian countries?"
"Yes, it's not just me who sees it. As you just said, many people on Wall Street see it."
David took a sip of coffee to moisten his throat, and then continued, "For example, when Charles Roberts of Morgan Stanley and I had dinner together two months ago, he mentioned this. He said that among the countries in Southeast Asia, Thailand's current situation is the most dangerous. Countries like Thailand are simply playing with fire with their current foreign exchange policies. In order to attract foreign investment, these countries maintain a fixed exchange rate on the one hand, and expand financial liberalization on the other hand. These are two contradictory policies. In order to maintain their domestic fixed exchange rate system, these countries must use their foreign exchange reserves to make up for the deficit for a long time, which will inevitably lead to an increase in foreign debt. Under such circumstances, these countries will inevitably have too much short-term and medium-term debt. In this case, once the outflow of foreign capital exceeds the inflow of foreign capital, and the country's foreign exchange reserves are not enough to make up for the shortfall, then the depreciation of the country's currency is inevitable."
"Charles and I have the same judgment. Thailand is a typical example of this contradictory financial policy. Thailand's own financial system is imperfect, but before the country's financial system was straightened out, it actually lifted controls on its capital market in 1992. This allowed the flow of short-term funds to flow unimpeded, and a large amount of international hot money took the opportunity to flow into Thailand."
"The huge amount of international hot money entering the Thai financial market may seem to make Thailand's economy prosper immediately, but it has also planted a nuclear bomb. Once the time is right, this nuclear bomb buried in the Thai financial sector will inevitably be detonated. At that time, the Thai financial system will inevitably be killed, and the international hot money can slowly enjoy a feast!"
Yang Jing also knew about Charles Roberts that David was talking about. This guy also worked at Goldman Sachs before and had a good personal relationship with David. However, this guy later jumped from Goldman Sachs to Morgan Stanley, but the two still maintained a good friendship. Moreover, David was planning to poach Charles, and Yang Jing agreed to this.
"Well, David, your judgment is almost the same as mine. That is to say, both of us, including Charles, believe that a financial crisis is about to break out in Southeast Asian countries. So David, are you sure you can make a big splash again in this crisis?"
"Haha, Boss, this is my favorite job! The Japanese market has become a stagnant pool of water. It can no longer excite me. My sword has long been thirsty..."
Continue read on readnovelmtl.com
