Business Ethics:

Stock Market Chaos in the Far East

Stock Market: East vs. West

by Trish Overby

Over the past six months, we have heard much about the financial troubles facing the Far Eastern countries of Japan, Korea, Malaysia, Thailand, and Indonesia. These countries' governments talk of financial reforms and have attempted to assure the International Monetary Fund (IMF) of the changes. But the changes seem superficial and the existing collaboration between governments and the financial establishments in all of these countries seems to remain just as it was.

These so called reforms do not scratch the surface. For years the banks, corporate business and governments have had collaboration, favouritism and monopolistic tendencies amongst themselves. A preoccupation for improving the companies profits with a little help from our government and banker friends has taken over the Far East. There are no regulations or controls to protect the investors or small business people against such 'co-operative' enterprises. Instead, they join the 'rush' to make money on the market.

Future Investments

An example of this is the job market in Taiwan. About l0 years ago, it was difficult to find labourers who would train to make our gold plated jewellery. More and more young people were attending Universities to get a better education and hopefully a better job. Even if they found a good job, they spent a lot of their time investing what little money they could scrape together on the stock market. It became an obsession for a lot of people and they become more and more hooked. They started taking more and more risks. For awhile, they were making good money on their investments because the inflated market was so full of ready cash. Little did the average investor realise what was behind the boon of the rising economy.

Most damaging to the Tiger economies has been this speculation, forecasting and futures that has caused the financial chaos now present in most of these countries. As we have experienced it here in the 1980's and had our 'Black Thursday', so now the Far East is facing economic reality. The fiasco with Nick Leeson and Barings was probably only the tip of the iceberg with regards to how the financial markets were using speculation and chance in the property and economic markets.

Money, Money, Money

The primary motivation of all these financial risks is profit. Whether it is big business or the small private investor, at the end of the day we all want to make a profit. This is what business is all about. And yet, there is inside of us something that wants more money. We receive some sort of security from the money we make but also some sort of thrill in acquiring it. The desire for more profits requires us to take greater risks and chances.

This obsession of money or greed which we find now in the Far East is also present in the Western world. The western stock markets have some regulations to curb the misuse of insider trading. As a tool, the stock market can be a balanced way to make money. Most investors have a well-rounded portfolio of all kinds of stocks and shares--low and high risk. The returns on investor's money is steady and, usually, upwards. The misuse of the stock market investments is prompted by the desire for more money and more of it quicker. There is no amount of reforms or regulations that can stop this, unless, it is a human reform. This human reform is vital both in the East and the West to make our stock markets what they really should be, a tool in which we can help one another financially without the preoccupation of how much we get back from our investments.

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