Asia's stocks market jumped sharply higher after leading central banks moved to add funds to the financial markets. As Ron Corben reports from Bangkok, there is confidence that Asian economies are in good shape to weather a recession in the United States and Europe.
Central banks in the United States and Europe on Monday offered commercial banks unlimited loans at fixed interest rates, to increase confidence in the financial system. And several governments announced steps to guarantee bank deposits, including Australia and Indonesia.
The result - a surge in share prices in Asia. Hong Kong's Hang Seng index leapt over 10 percent, while Australia's S&P/ASX Index was up four percent. South Korea's KOPSI index gained almost four percent.
Indonesia's stocks, after an initial sell off, rose modestly. Monday was the first day of trading after authorities shut the market for three days last week after the index sank 20 percent.
Monday's rally followed one of the worst weeks in global stock trading in more than 20 years. Markets were hit by near panic selling after weeks of growing fear that the global credit crisis could essentially shut down financial markets. Investors in Asia sold because of fears the crisis would plunge the U.S. and Europe into a severe recession, which would reduce demand for Asian exports.
Tony Pearson, head of Australian economics for the ANZ Banking Group in Melbourne, remains cautious but says that Asian economies can survive a global economic downturn.
"The markets in Asia have certainly been hit pretty hard though, but again that seems to reflect somewhat of a flight of capital out of Asia to the U.S. Asia growth rates will slow - no doubt about that - if the developed world goes into recession Asia cannot avoid that. What will save the bigger Asian economies will be internal demand," he said.
Pearson and other economists say that large foreign exchange reserves, modest levels of foreign debt and strengthened banking regulations should help Asia escape the worst of a recession.
In addition to stocks, the oil market gained Monday, with the price of a barrel of oil rising $3 in Asian trading, to just over $80.
The South Korean won, which fell to 10-year lows last week, rallied Monday and was up almost six percent from last Friday.