We are very bearish on Southeast Asia,'' says Thomas, who started shunning such markets a year ago. In the coming year, investing in Asia will be like playing three-dimensional chess. What started out as a regional ailment in Asia has metastasized into a broader emerging-market cancer. The failure of traditional economic remedies promoted by the International Monetary Fund is a big drag, too. Hiking interest rates to defend currencies, wholesale corporate restructuring, more disclosure, and less government meddling haven't done the trick.
Most Asian countries are now in full crisis-management mode.
And some of the emergency measures are anathema to the free-market purists often found running big mutual funds. Valuing stocks is next to impossible as some markets begin to look like a rigged game. If Japan's experience is any guide, the money will be wasted. Huge salvage operations for the region's banks are also under way. But the problem keeps eluding solution.