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Web-only Exclusives
November 30, 2000

From Our Correspondent: Hirohito and the War
A conversation with biographer Herbert Bix

From Our Correspondent: A Rough Road Ahead
Bad news for the Philippines - and some others

From Our Correspondent: Making Enemies
Indonesia needs friends. So why is it picking fights?

Asiaweek Time Asia Now Asiaweek story

Silence Is Not Golden

Browbeating analysts will hamper the search for solutions


NOBODY LIKES TO HAVE faults pointed out. So governments, politicians and businessmen throughout Asia have been understandably peeved by much of the doom-laden talk from financial analysts about the region's current economic turmoil. But expressing dismay or disagreement is one thing, suppressing discussion of the problems is quite another.

Investment analysts are charged by their clients not only with finding profitable opportunities but also with exposing dangers. These days, that often makes them bearers of bad tidings on Asia. Their bearishness may indeed erode confidence further, prompting more selling on stock and currency markets. Even so, it is crucial to remember that their bearishness is usually rooted in real economic or financial flaws.

The region's currency crisis has seen some ham-handed tactics by governments. In July, Thai authorities raided the offices of Capital Nomura Securities and ABN-Amro Hoare Govett, looking for faxes they allegedly sent abroad warning of imminent bank collapses. Malaysia last month said that analysts and writers found "collaborating" with foreigners to bring down the economy could be hit with the Internal Security Act, which allows detention without trial. Some local bankers urged authorities to identify and punish parties who helped foreign speculators.

Last week, the president of state-owned China Construction Bank chided Morgan Stanley -- its partner in a joint venture -- because one of its top strategists advised clients to pull out of Hong Kong's collapsing stock market. Wang Qishan was quoted as saying he felt "angry" that the U.S. securities house should benefit from China and Asia and still make such a recommendation. That prompted Morgan Stanley to state that while it had a right to make investment judgments, its currently negative views did not detract from its commitment to, or long-term optimism about, Hong Kong and China.

One thing that officials need to understand is that unless independent analysts are able to make negative as well as positive calls, investors will feel leery about putting in their money. Fortunately, Asian authorities have not arrested anyone and no businessman has been punished for hedging his foreign-exchange exposure by selling regional currencies. And analysts have continued to say negative things -- though we do not know what might have been left out.

While overt attempts to silence critics have been rare, excessive anger or disapproval may still intimidate analysts. There is little doubt that some have been rattled. One recently panicked after receiving a letter from Thai authorities asking for an explanation of his bearish views. A second reading indicated that the officials genuinely wanted to understand his thinking, but the episode showed how the tense atmosphere can discourage discussion. Besides, negative analyses cannot really be suppressed. If stalled in Asia, they will be aired in New York or London and routed back here .

Some of the region's present woes are traceable to an unwillingness to listen to negative voices -- warnings about overvalued assets, uneconomical investments and deals based on relationships rather than business basics. Now is not the time to silence these voices, but to pay them careful heed.


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