1998 all over again

The big time spill in the market least week was blamed on currency problems in Turkey and Argentina, but one has to remember such events have happened in the past. We came across this in the January 12, 1998 edition of Barron’s:

“With wave after wave of bad news blasting across the Pacific, the Dow Industrials slumped almost 100 points Thursday, then went into a 222-point power dive Friday that plunged the index to a loss of more than 4% for a trading year that began only six days earlier.”

“Driving the losses were three straight days of selloffs in Southeast Asia, led most notably by a one-day, 26% rout of the Indonesian rupiah on fears that an IMF rescue package would be torpedoed. But virtually no market and no currency was spared, with the Philippine bourse closing at its lowest point since 1993, Hong Kong’s Hang Seng index gettering hammered below 9,000 and Japan’s Nikkei unable to push through the 15,000 barrier for any extended time. Chaos was the rule: Indonesia was swept by rumors that President Suharto’s palace was ringed by army tank; Koreans sold and donated thousands of pounds of gold to the government; a distraught Thai broker jumped to his death from a high-rise in Bangkok.”

Sounds somewhat similar to today. But a week later, the market had rebounded. We will see if the same script plays out this time.