In addition, substantial amounts of good news have come from the region recently. In 1997 and early 1998, continued positive developments have been seen in China, and, in fact, China now generally looks more attractive than it did before the handover. China may be able, through its continued growth, to even help spur a recovery in the region. Even after the devaluations in the region, China remains competitive when compared to its southern neighbors, and the chances of a renminbi devaluation continue to appear small. On top of this, the handover of Hong Kong went exceptionally smoothly and occurred without any missteps.
Several questions remain, however.
Most commentators are of the opinion that sovereign borrowers should take the lead and reopen bond markets so that new benchmarks can be established. Bargain prices have also fostered a marked increase in private fundings, while the public markets take time out to re-evaluate the situation and future prospects. Viable deals in the present climate include securitizations and credit-enhanced structures, as well as export oriented issuers earning U.S. dollars. Japanese banks, the largest foreign lenders in the region, are generally in a unique and unenviable position. A renewal of Japan's prosperity would be an easy answer to the problems facing the rest of Asia, but, perhaps, too easy an answer.