YouSaid · the spoken record

Russell Napier

lines on the record: 105
first: 2022-01-30
most recent: 2022-01-30
sittings or episodes: 1
sources: podcast

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“So there's something called the fundamentals, and all I was saying is that the fundamentals are related to monetary policy, and everyone was saying, no, they're not. So what did they relate these exceptional fundamentals to? Well, the first thing is you could clearly point out that GDP growth in Asia was higher than the developed world. And you could say that that would be sustainable. And to a large extent, over the long term, it has been sustainable. But then you were making this huge jump to say that the fact that there was high GDP growth would mean that there would be high returns from equities. One of the first rules of financial history is that's not true. I mean, it's simply not true. It depends a little bit on the price that you pay or so the value that you pay for these things. But also it didn't really work. So if you go back to that amazing period, because remember, we're talking about a bus that occurs just as Amazon is coming to the stock market, or Amazon is becoming a business. Netscape was the first big sort of tech stock that came to the market. And fund managers didn't want anything to do with it. They said the American economy.”
2022-01-30 · Forward Guidance · Lessons From The Asian Financial Crisis | Russell Napier · IDENTIFIED FROM THE TRANSCRIPT
“The Japanese economy. There were a lot of Japanese banks going bankrupt then, but probably more importantly, it led to the Japanese banks putting credit from Asia. So it wasn't by any stretch the imagination the only reason why the Asian crisis came when it came. But the reluctance of or inability of Japanese banks to keep lending, lending foreign currency, a little bit of yen, but actually mainly lending dollars, borrowing dollars in the euro markets and lending them into Asia. The end of that trade played a significant part in when this thing came to an end. So one did feed into the other, though, as we'll probably go on to discuss, Asia had its own debt boom, which had to crack, but the fact that the Japanese banks were becoming more cautious was one of the reasons that the Asian debt boom did crack.”
2022-01-30 · Forward Guidance · Lessons From The Asian Financial Crisis | Russell Napier · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, the structural fragility is related to debt. Japan's were slightly different because it related to domestic debt. The other Asian markets were foreign currency borrowing. But the Japan one was just, it was an over or an after shadow of a huge boom, which had involved a lot of domestic currency debt and a massive asset price boom in the late 1980s, which actually was associated with exchange rate management and an arrangement Japan had come to with the rest of the world as to how they would manage the exchange rate. It produced far, far too loose a monetary policy in the late 1980s and it burst. What we didn't know in Asia at the time, because we just sort of saw the stock market collapse and assumed that the damage was done. But actually, Japan being Japan, they hid quite a lot of the damage. And the damage kind of unslowed, sorry, unfurled slowly through the banking system. And it really did begin to affect the domestic economy by 1996, which is the period we're talking about.”
2022-01-30 · Forward Guidance · Lessons From The Asian Financial Crisis | Russell Napier · IDENTIFIED FROM THE TRANSCRIPT
“Five years, I was considered to be an expert on everything to do with these markets, so I ended up parachuting in as a strategist in May 1995, but already having covered the markets and already been pretty pessimistic about some of the structural fragilities which I thought were building up. And the problem with those is you never know when they're going to come home to roost. But what I discovered when I knew before I got there and what I really discovered when I got there, nobody wanted to discuss these structural fragilities. I mean, it was a great big party. You know, when the party's over, give me a ring, then we'll discuss the structural fragilities. And discussing them early doesn't get you invited to too many parties.”
2022-01-30 · Forward Guidance · Lessons From The Asian Financial Crisis | Russell Napier · IDENTIFIED FROM THE TRANSCRIPT
“It's pretty ridiculous that I became an equity strategist in Hong Kong because I was so young and I had had very limited experience. So I joined, started in this business in October 1989. By May 95, I was a strategist in Hong Kong recommending, or sorry, advising global fund managers, which is crazy when you think about it. So how could that happen? Obviously, I would never have got a job recommending or advising people on investing in US stocks at that young and tender age. But this was a new market. I mean, a fairly new market. And in terms of liquidity, it's kind of a market that doesn't have liquidity kind of isn't a market. So these markets, some of them have been around for a long time, but they were so illiquid that nobody paid any attention. So they were becoming more liquid. Now, at that stage, a market that has no liquidity doesn't have any experts because nobody's really bothered very much. So it was possible to get a job doing something as peculiar as that at a very young age. So that's how I got there. I've been a fund manager.”
2022-01-30 · Forward Guidance · Lessons From The Asian Financial Crisis | Russell Napier · IDENTIFIED FROM THE TRANSCRIPT