Asia Economy

In the nearly two years since Thailand's economy went into meltdown, U.S. Export-Import Bank Chairman James Harmon has witnessed enough signs of improvement to voice "cautious optimism" that Asia's battered economies have hit bottom. But the former Wall Street investment banker has also encountered enough cases of "Wild West-style" corruption, cronyism and poor management to know the region's problems are far from over.

If you believe that Asia's economy is on the mend and--more important--if you can tolerate volatility and are willing to monitor an investment closely, "closed-end" funds can be an attractive way to bet on an Asian recovery. The caveat, right upfront: Some experts think the easy money may already have been made in closed-end Asia-region funds.

For the first time in seven months, loaded cargo containers outnumbered empty ones on ships leaving the Port of Los Angeles in February, in yet another sign that some of Asia's troubled economies are on the mend, port officials said Wednesday. "Some of the Asian economies are starting to recover, [South] Korea in particular," said Al Fierstine, the port's director of business development. "You're seeing items starting to move that have to in order for them to manufacture certain products."

Asian buyers returned in relatively strong numbers this week to the American Film Market, the annual beachfront gathering in Santa Monica where foreign entertainment executives buy films for their theaters, TV channels and video stores. Still, the number of Asian buyers is nowhere near what it was in the mid-1990s before the economy there began to slide.

South Korean unemployment has practically doubled over the past year, and analysts say worker protests are likely to become the main threat to economic stability. The government's National Statistical Office said Friday that unemployment rose to a record high of 1.76 million in January, from 1.67 million the previous month and 934,000 a year ago. The number means that the jobless rate before seasonal adjustment rose to a historic high of 8.5% in the month from 7.9% in December and 4.

Behind a veil of deference, praise and joviality, the United States on Friday delivered a needle-sharp message to Japan: Your economy is deteriorating and you need to step up your game, for the good of Japan, Asia and the world. "Prospects for Japan look worse than they did a few months ago," Lawrence H. Summers, deputy Treasury secretary, told a packed news conference in Tokyo.

NEC Corp., Japan's biggest personal computer and chip maker, said Friday it overhauled its management and will cut 15,000 jobs, or nearly 10% of its work force, over three years as it struggles to recover from slumping sales and massive losses at its Packard Bell unit in the United States. About 6,000 of the job cuts are outside Japan; the company did not say how many will hit its 7,000 U.S. workers. The downsizing is the latest corporate fallout from the spreading economic crisis in Asia.

The Port of Los Angeles, citing lingering effects of Asia's economic crisis, reported Wednesday a slight drop in January exports but a rise in the amount of inbound cargo. But port officials said that seven months into the fiscal year, the port is seeing an increase in business of nearly 15% when compared with fiscal 1998. At the nation's No. 2 port, 130,946 cargo units were imported in January, a jump of 12%.

World leaders who ended a week of meetings here Tuesday fear that the other shoe is about to drop in the Asian economic crisis: a wave of protectionism not seen since the Depression-bound 1930s. With near unanimity, world figures ranging from Kofi Annan, secretary-general of the United Nations, to former Secretary of State Henry Kissinger say conditions are ripe for a broad retreat from world trade, a development that would risk economic stagnation and worse.

The threat of a Chinese currency devaluation has hung over the world like a giant red shadow for more than a year, and the fears were rekindled this week in the wake of Brazil's financial turmoil. But according to several traders, investment bankers and economists, the global financial system--and Asia itself--is far better equipped to weather a Chinese devaluation now than it was even six months ago.