On the basis of overall economic fundamentals, the Asian emerging-market economies remain positioned for strength. To be sure, the recent decisions by Thailand, the Philippines, Malaysia, and Indonesia to loosen their currencies' ties to the dollar introduces an added element of uncertainty into those markets and will contribute to continued volatility, at least over the near term. One of the toughest calls in the region is Japan. But even here signs are evident that the country's protracted recession may finally be over. Supported by a recovering economy and a weaker yen, the Japanese market rebounded sharply in the 2Q97.
Uncertainties still loom over the market, but the worst appears to be over.
Admittedly, it's still early to forecast a resurrection in Pacific-fund flows. However, financial assets travel fast in an information age and valuations in many markets are once again attractive. As investors continue to look beyond the frothy U.S. market for opportunities, the Pacific markets will eventually stage a broad-based rebound.