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Published on January 17, 2008

And as a Citi worker said, the sub-prime fiasco that has played out over the course of a year has kept staff working even longer into the wee hours.

The current loss so widely reported in the global media, if anything, is a "natural progression in the repair of the market", Norman Villamin, head of research and strategy at Citi Private Bank Asia-Pacific, said yesterday.

Now is the early stage of the two-to-three year repair process, he said.

With the US unemployment rate on a record rise, the debacle is similar to

the US recession in the early 90s, he said.

Just that this time around, despite the likely revision of interest rates by 50 basis points when the Federal Reserve Board meets on January 31, the magnitude of the damage is much greater in terms of economic scale.

With a US$18-billion (Bt600 billion) sub-prime loss so far, Citi Private Bank sees widening credit spread and opportunities amid distressed assets. Emerging Asian markets, particularly China, will continue to benefit from excess global liquidity and the resulting capital liquidity relocation.

While the growth story marked 2007, this year's keyword is "volatility", Villamin said.

Particularly in China, the focus will be on companies that can manage cost pressures and inflation.

With tight supply, growing demand and low inventories, investment in and related to agricultural commodities has become attractive.

And with more infrastructure being built, developing economies such as the Philippines and Indonesia will be experiencing "aggressive recovery" - something Thailand has yet to see materialise, he said.

But the return of domestic consumption in the Kingdom is likely to boost growth.

"While some Citi businesses and units will be restructured, resulting in some job losses, the impact for Thailand and countries in Asia is expected to be minimal because the region continues to enjoy strong and sustained growth," said Tohphan Tuchinda, Citibank's head of corporate affairs in Thailand.

Ki Nan Tsui

The Nation