Asian crisis

If one of the variables held constant in the demand cinvc were to change, it would shift the whole demand cuivc, called a change in demand. For example, suppose Figure 2 represents the world market for crude oil. The Asian crisis beginning in 1997 reduced Asian income, which in turn reduced Asia s demand for oil. This decrease in demand lowered price moving along the supply curve, called a decrease in quantity supplied. 

In the late 1990s, when investors noticed the combination of declining growth and declining capital productivity, many lost faith in the segment. While fears of repercussions from the Asian crisis proved unfounded, other structural factors such as Asian competition and the commoditization of many former specialty products took effect in their stead. 

In terms of total returns to shareholders (TRS), too, the chemical industry has proved its staying power in recent years. Although it suffered badly during the Asian crisis, and the ensuing technology and Internet bubble at the end of the twentieth century did not bolster chemical stocks and at the same time lured investors away from more traditional plays, the new millennium has seen the chemical industry continuing to deliver TRS that is almost in line with the market (Fig. 5.1). 

This development resulted in a relatively satisfactory stock performance in comparison with other basic materials industries such as steel and, in general, was more or less in line with the market as a whole until the mid 1990s (Fig. 3.3). The Asian crisis, however, proved quite a setback - wiping an estimated USD 25 billion off the industry s economic profit (return on invested capital minus WACC times invested capital) for Asian companies alone. The recovery of the Asian markets saw no matching improvement in the perception of the chemical industry by... 

Buffeted by the decline in demand stemming from the Asian crisis of the late nineties, the recent increase in the price of its major raw material - oil - and keen competition on the world s stock markets from New Economy companies, its management teams are now hard at work all over the world to regain attractiveness in the eyes of the shareholders. 

U.S. actions during the South Asian crisis are discussed in Chapter 8. 

TEST OF FRIENDSHIP THE I97I SOUTH ASIAN CRISIS... 

DoS to Kissinger, Contact with the Chinese on the South Asian Crisis, 27 August 1971, Box 2189, SNF( 1970-3), RG59, NA. 

While the volume of additives worldwide increased by 6% from 1996 to 1998, value actually fell, by 1%, due to the Asian crisis. Trying to find some common ground between the best forecasts, it appears that the world additives market amounts to about 7.8 million tonnes, valued at about US 16 billion and is growing overall at about 3.5-4% per year. Fillers account for an estimated 50% by volume but in value they make up only 15% - and here lies the stimulus for much current development. 

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