News / Asia

Asia Stocks Tumble

A man is reflected on an electric board showing the Nikkei 225 index in Tokyo, Japan, August 3, 2011
A man is reflected on an electric board showing the Nikkei 225 index in Tokyo, Japan, August 3, 2011

Investors in Asia turned pessimistic, Wednesday, reversing gains earlier in the week after U.S. lawmakers reached a debt deal that averted an unprecedented American default.

Share prices fell sharply in the region in the latest trading session, with analysts saying Asian stock exchanges were reacting to renewed worry about the direction of the world’s largest economy.

Major stock markets in Asia dropped, on average, more than two percent. Meanwhile, gold surged to a record high, while the dollar stayed weak, especially against the Japanese yen.

Fresh concern followed Wall Street’s Tuesday declines because of weak U.S. economic reports and poor earnings from several major American corporations.

In South Korea, the benchmark KOSPI closed at 2066 points, a drop of 2.6 percent. In Japan, the Nikkei index finished 207 points lower, some 2.1 percent.

Hong Kong’s Hang Seng index fell more than 428 points, a loss of 1.9 percent. And, in India, the benchmark Sensex hit a six-week low in intra-day trading.

Sean Hwang, who heads equity research at Mirae Asset Securities in Seoul sees a temporary flight to safety among Asian investors continuing for a week or two.

"The sky-rocketing U.S. ten-year Treasuries and gold price shows the risk appetites of investors are really low. For the time being the investors' preference to these kind of safe assets will remain. But the price imbalance between the risky assets and the safe assets are heavily distorted," he said. "So we expect the risky assets' price to recover, sooner or later."

Hwang says investors will realize there is still value in purchasing stocks in some of the emerging markets.

"Compared to the other asset classes, the stock markets, such as [South] Korea and China, appear to be significantly undervalued,” said Hwang.

In Japan there are indications of readiness to intervene in currency markets, with the dollar around 77 yen, nearing a record low in the modern era.

Japanese Finance Minister Yoshihiko Noda is vowing to make “an all-out effort” to prevent a further surge for his country’s currency.

Prime Minister Naoto Kan is also calling the strong yen a source of concern and says Japan has to closely watch foreign exchange markets.

The strong yen threatens to eliminate any economic rebound for Japan, following its devastating March 11th earthquake and tsunami. That fear is being echoed by Bank of Japan Governor Masaaki Shirakawa, who says the yen’s current level could negatively effect the country’s economy, the world’s third largest.

Meanwhile, a little-known Chinese debt rating agency has downgraded the U.S. credit rating.

Dagong Global Credit Rating lowered its rating for U.S. debt from A-plus to A. It says the deal reached in Washington this week will not solve the underlying U.S. debt problems nor improve the country's ability to pay.

The Chinese downgrade is not expected to have much effect on interest rates because the two major rating agencies in the United States have announced they will not immediately be altering America’s top rating.

Chinese Central Bank Governor Zhou Xiachuan is calling on Washington to impose “responsible measures” to manage its debt. In a statement, Zhou warned that volatility in the U.S. bond market could affect the international monetary system’s stability, jeopardizing a global economic recovery.

China is the largest holder of U.S. debt and the world’s second largest economy.

You May Like

At International AIDS Conference One Goal, Many Paths

The 12,000 delegates attending 20th International AIDS Conference in Melbourne have vastly different visions about how to eradicate disease More

Disasters May Doom Malaysia’s Flag Carrier

Even before loss of two jets loaded with passengers on international flights, company had been operating in red for three years, accumulating deficit of $1.3 billion More

Afghan Presidential Vote Audit Continues Despite Glitches

Process has been marred by walkouts by representatives of two competing candidates, Abdullah Abdullah and Ashraf Ghani More

This forum has been closed.
Comments
     
There are no comments in this forum. Be first and add one

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Nature of Space Exploration Enters New Agei
X
Elizabeth Lee
July 20, 2014 2:36 AM
Forty-five years ago this month, the first humans walked on the moon. It was during an era of the space race between the United States and the Soviet Union. World politics have changed since then and -- as Elizabeth Lee reports -- so has the nature of space exploration.
Video

Video Nature of Space Exploration Enters New Age

Forty-five years ago this month, the first humans walked on the moon. It was during an era of the space race between the United States and the Soviet Union. World politics have changed since then and -- as Elizabeth Lee reports -- so has the nature of space exploration.
Video

Video Chicago’s Argonne Lab Developing Battery of the Future

In 2012, the U.S. Department of Energy’s Office of Science awarded a $120 million grant to a new technology center focused on battery development - headquartered at Argonne National Laboratory in suburban Chicago, Illinois. As VOA’s Kane Farabaugh reports, there scientists are making the next technological breakthroughs in energy storage.
Video

Video In NW Pakistan, Army Offensive Causes Massive Number of Displaced

Pakistan’s army offensive in North Waziristan has resulted in the large-scale displacement of the local population. VOA's Ayaz Gul reports from northwest Pakistan where authorities say around 80 percent of the estimated 1 million internally displaced persons [IDPs] have settled in Bannu district, while much of the remaining 20 percent are scattered in nearby cities.
Video

Video Kurdish Peshmerga Force Secures Kirkuk, Its Oil

The Kurdistan regional government has sent its Peshmerga troops into the adjacent province of Kirkuk to drive out insurgents, and to secure the area's rich oil fields. By doing this, the regional government has added a fourth province to the three it officially controls. The oil also provides revenue that could make an independent Kurdistan economically strong. VOA’s Jeffrey Young went out with the Peshmerga and filed this report.
Video

Video Malaysia Reeling: Second Air Disaster in Four Months

Malaysia is reeling from the second air disaster in four months involving the country’s flag carrier. Flight 340 vanished in March and despite an extensive search, no debris has been found. And on Thursday, Flight 17, likely hit by a surface-to-air missile, came apart over eastern Ukraine. The two incidents together have left more than 500 people dead. VOA Correspondent Steve Herman reports from Kuala Lumpur.
Video

Video Diplomatic Crisis Grows Over MH17 Plane Crash

The Malaysia Airlines crash in eastern Ukraine is drawing reaction from leaders around the world. With suspicions growing that a surface-to-air missile shot down the aircraft, there are increasing tensions in the international community over who is to blame. Henry Ridgwell reports for VOA from London.
Video

Video Undocumented Immigrants Face Perilous Journey to US, No Guarantees

Every day, hundreds of undocumented immigrants from Central America attempt the arduous journey through Mexico and turn themselves over to U.S. border patrol -- with the hope that they will not be turned away. But the dangers they face along the way are many, and as Ramon Taylor reports from the Rio Grande Valley in Texas, their fate rests on more than just the reception they get at the US border.
Video

Video Scientists Create Blackest Material Ever

Of all the black things in the universe only the infamous "black holes" are so black that not even a tiny amount of light can bounce back. But scientists have managed to create material almost as black, and it has enormous potential use. VOA’s George Putic has more.
Video

Video Fog Collector Transforming Maasai Water Harvesting in Kenya

The Maasai people of Kenya are known for their cattle-herding, nomadic lifestyle. But it's an existence that depends on access to adequate water for their herds and flocks. Lenny Ruvaga reports for VOA, on a "fog collector."

AppleAndroid