The US writer Hunter S Thompson once wrote of the "high and beautiful wave" of optimism building in the 1960s on the west coast of the US and that some years later, standing on a hill in Las Vegas and with "the right kind of eyes", it was almost possible "to see the high-water mark – that place where the wave finally broke and rolled back".
An appropriately placed observer in Hong Kong or Tokyo might now see a similar phenomenon at work in Asia, for the wave of enthusiasm about the continent that has been building in the past few years in the financial community seems now to be breaking.
Much of the retreat westwards is driven by necessity. AIG, which is auctioning two Japanese life insurance units; Citi, which is selling its recently purchased Japanese retail brokerage Nikko Cordial; and RBS, which has hired Morgan Stanley to help it dispose of Asian assets acquired from ABN Amro, can reasonably be said to be in urgent need of the capital that these cutbacks will unlock.
Several of the world’s largest private equity firms are scaling back in the region as well: Cerberus has been reported to be closing down its Hong Kong office, and 3i has announced that it will close its Hong Kong and Shanghai branches to concentrate on Beijing.