Asia Stocks Fall in Response to US Bank Rescue | Voice of America - English
Asia's stock markets have fallen, as fears grow of an extended global recession. As Ron Corben reports from Bangkok, oil prices also sank, as investors showed they had little confidence in measures in Europe and the United States to end the credit crisis.
Nervous investors fled markets Monday in Asia. Hong Kong's key Hang Seng Index closed down five percent while Tokyo's benchmark Nikkei 225 index fell to its lowest closing level since February 2004 at 10,473 points. Indonesia's stock market plunged 10 percent, the steepest single day decline on record. Investors did not appear impressed with the $700 billion rescue plan approved Friday to help U.S. banks saddled with massive amounts of bad loans. And economists say the markets were further rattled new reports of troubled banks in Europe. "So it's like its spreading," said Connie Bolland, the chief economist at Economic Research Analysis in Hong Kong. "I think people are getting more alarmed that a global recession is coming." In another sign that investors expect a severe recession, the price of a barrel of oil fell briefly below $90 Monday in Asia. Oil prices peaked at $147 in July but have fallen since then over fears demand a recession will cut demand. Shuvojit Banerjee is an economist with the United Nations Economic and Social Commission for Asia and the Pacific. He says the outlook is bleak for economies dependent on export markets for growth. "Clearly the Asia export-oriented economies will be hard hit by the continuing problems in the United States and Europe Union," he said. "Many countries in the region are highly dependent on exports and they are likely to face a difficult scenario in the next few months and the year going forward." Banerjee says the full effects of the credit crisis on Asia are expected to be seen next year. He says a shift of money to lower-risk investments outside Asia also will further hurt share prices. "There's likely to be a major re-correction of markets both worldwide and specifically in Asia. Asian markets have done very well over the last few years. [But] money is likely to be pulled out of this region and back into safe assets like American treasury bonds," he said. "So markets here are likely to continued outflows of capital." Banerjee expects Asia to see firm signs of recovery over the next two years, given the region's trade balances and large foreign exchange reserves, as well as growing domestic demand. But, he says, a full recovery will come only after developed economies again return to growth.