Asia's Markets Are Starting To Look A Lot Like 1997, HSBC Says. But The Biggest Risk Is Different This Time.

Higher U.S. borrowing costs are one of the clearest comparisons, with the benchmark 10-year Treasury yield trading around 4.79% Tuesday after climbing roughly 80 basis points since February. (Credit: AFP via Getty Images/Jade Gao)

Rising U.S. Treasury yields, a sharply weaker Japanese yen and intense investor enthusiasm around a new technology boom are giving markets an uncomfortable resemblance to the period before the 1997 Asian financial crisis, HSBC said. However, it noted that the region's main vulnerability has changed dramatically since then.

HSBC chief economist Frederick Neumann pointed to those parallels in a recent note, arguing that current financial conditions share several features with the run-up to the crisis that eventually triggered currency collapses, capital flight and deep recessions across parts of Asia. CNBC reported that Neumann nevertheless believes the differences between then and now outweigh the similarities.