Ghosts of '97 Continue Haunting Emerging Markets

Bulls point out that the key difference between today and 10 years ago is that Asia's "tiger cubs," such as Thailand and Malaysia, are now running big national current account surpluses, meaning there's still plenty of cash for these countries to buy back both local stocks and currencies if things go awry. But the U.S., which ran similar current account surpluses until early 2001, is testament to how quickly funds can run dry in times of political turmoil.

Charles Puntratanamongkol, a prominent Thai entrepreneur and heir to the largest plastics empire in Southeast Asia, is concerned about exactly this. "There's a genuinely strong and credible belief here that the bombs here in Bangkok are politically rather than terrorist motivated," he says. "If that's the case, then I'm worried, because there's no recognizable solution and there's no telling how long this could go on for."

On New Year's Eve, eight bombs went off in central Bangkok, killing three and wounding dozens more. No one has yet claimed responsibility, raising concerns that the explosions were organized by disgruntled supporters of former Prime Minister Thaksin Shinawatre, who has condemned the bombings from Beijing, where he is living in exile. Another theory is that the attacks were planned by Thailand's current military government, which has accused Shinawatre supporters of masterminding the attacks.

The bombings and recent moves by the new government to impose restrictions of withdrawals of foreign investment shocked investors in Thailand, whose main bourse, the SET, has fallen 17% in the past month and is down nearly 70% in the past 12 months.