After a good 2003, will 2004 be better
The past year has been a good one for Southeast Asian stocks. Markets in both Singapore and the Philippines have risen by more than 30% in dollar terms; Indonesia has surged more than 70%; and tigerish Thailand has leapt by almost 130%. Investors, needless to say, are keen to know whether lightning will strike again in the same places in 2004. There is indeed something good in store: elections.
The gains of the past year are easy to explain. Indonesia, for one, has finally found its feet after years of chaos following the regional crisis in 1997. Inflation and interest rates are failing, and the economy has grown by around 4% in the past year.
Thailand’s economy, meanwhile, has been doing even better. It has grown at an annual rate of 6.5% in the year as a whole. Because of low interest rates, consumers have been wildly purchasing cars and houses, helping crisis-hit companies pay off their debts and thus improving the balance sheets of Thailand’s struggling banks.
Analysts tell similar tales of asset increase all around the region. Markus Rosgen, of ING, a Dutch bank, notes that Asians have been piling up deposits in their bank accounts since the crisis. With interest rates so low, he argues, they now have an incentive either to consume more or to put their savings into more lucrative investments. Either way, share prices should rise. Even now, ail Southeast Asian markets are still well below their pre-crisis highs. Moreover, points out Christopher Wood of CLSA, an investment bank, all Southeast Asian markets except Singapore serve as useful hedges against America, since they do not rise and fall with Wall Street.
Unexpected events might yet upset these rosy prospects. There will be elections in the Philippines and Indonesia in 2004, and probably in Malaysia, too. Thailand goes to the polls at the beginning of 2005. Economically corrupted governments, street protests or bombing campaigns are always a possibility. But the responsible leaders seem likely to get re-elected in all four countries. Furthermore, they will spend a lot of money in the process, out of both the state budget and their own pockets, giving their economies a further boost. As a recent report by ING points out, Indonesian stocks rose in the nm-up to all of the past three elections.

What has happened in Indonesia in the past year（）