Liquidity ratios of Asian bond markets must be enhanced. This requires the further development of government bond markets and the establishment of a yield curve to facilitate cost effective hedging, efficient pricing and market depth. Turning to the equity markets, investors' confidence in transparency must be enhanced. For example, at the most basic levels, investors must come to assume that all relevant information has been disclosed. Equity investors always hope something has been left out.
Asian markets thrive unhealthily on the expectation that something can be bought at a bargain.
Investors persuaded themselves that stratospheric pricing was acceptable because of the likelihood of the asset transfers. The Asian markets should not allow such unrealistic expectations to be fostered. Fortunately, these needs are being recognized more and more frequently. Hopefully, we shall need fewer crises to emphasize the need for deregulation and liberalization. Deputy Prime Minister Lee of Singapore, a country relatively unaffected by the currency and financial crisis, made a thoughtful speech in early November regarding the need for changes in Singapore's approach to financial regulation and supervision.