ABSTRACT
Emerging Asia’s1 equity markets plunged to their lowest levels in 10 years in the wake of the global financial crisis, losing 66.4% in United States (US) dollar terms from their October 2007 peak to a market trough 1 year later (Figure 7.1). The global financial crisis, which deepened dramatically in September 2008 following the failure of Lehman Brothers (and other institutions), and growing evidence of economic slowdown in industrial countries exacted a heavy toll on emerging Asian equities. Indeed, in terms of the speed and magnitude of equity price declines, the impact of the global financial crisis exceeds that of the two previous crises that affected the region: the 1997-8 Asian financial crisis and the bursting of the global information technology bubble in 2001-2. Although Asian stockmarkets have rebounded strongly on early hopes of economic recovery since their troughs in November through February, clear signs of a turnaround for the global and regional economy remain elusive, contributing to continued market volatility.
