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

EU Court Fines Poland for Hosting CIA 'Black Sites'

Ruling is first time a court has acknowledged suspects were held and tortured at the sites, under US program launched following the 9/11 terrorist attacks More

Migrant Issues Close to Home Spur Groups to Take Action

Groups placing water, food in the desert, or aiding detainees after release, have one common goal: no more deaths of migrants crossing illegally into the US More

Video At AIDS Conference, Prevention Pill Stirs Excitement

Truveda shows promise, spurring debate over access and other approaches 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.
Israel Targets Gaza Supply Tunnelsi
X
July 24, 2014 4:42 AM
The Israeli military has launched a ground operation in Gaza to destroy the myriad tunnels that may have been used to smuggle weapons to Hamas. VOA's Zlatica Hoke reports that could mean more hardship for the people of Gaza, who obtain some of their essential supplies through these underground passages
Video

Video Israel Targets Gaza Supply Tunnels

The Israeli military has launched a ground operation in Gaza to destroy the myriad tunnels that may have been used to smuggle weapons to Hamas. VOA's Zlatica Hoke reports that could mean more hardship for the people of Gaza, who obtain some of their essential supplies through these underground passages
Video

Video MH17's 'Black Boxes' Could Reveal Crash Details

The government of Malaysia now has custody of the cockpit voice and flight data recorders from Malaysia Airlines Flight 17, which was hit by a missile over Ukraine before crashing last week. As VOA's Carolyn Presutti reports, the so-called black boxes may hold information about the final minutes of the flight.
Video

Video Living in the Shadows Panel Discussion

Following a screening of the new VOA documentary, "AIDS - Living in the Shadows," at the World AIDS conference in Melbourne, a panel discussed the film and how to combat the stigma associated with HIV/AIDS.
Video

Video IAEA: Iran Turns its Enriched Uranium Into Less Harmful Form

Iran has converted its stockpiles of enriched uranium into a less dangerous form that is more difficult to use for nuclear weapons, according to the United Nations’ Atomic Energy Agency. The move complies with an interim deal reached with Western powers on Iran's nuclear program last year, in exchange for easing of sanctions. Henry Ridgwell reports for VOA from London.
Video

Video Relic of Saint Draws Catholics Worried About Immigration Issue

A Roman Catholic saint who is a figure of devotion for those crossing the border into the United States is attracting believers concerned about the plight of undocumented immigrants. Mike O'Sullivan reports from Los Angeles, where a relic of Saint Toribio has drawn thousands to local churches.
Video

Video US Awards Medal of Honor for Heroics in Bloodiest of Afghan Battles

U.S. combat troops are withdrawing from Afghanistan, on pace to leave the country by the end of this year. But on Monday, U.S. President Barack Obama took time to honor a soldier whose actions while under fire in Afghanistan earned him the Medal of Honor. VOA's Jeff Seldin has more from the Pentagon.
Video

Video Ukraine Rebels Surrender MH17 Black Boxes

After days of negotiations, a senior separatist leader handed over two black boxes from an airliner downed over eastern Ukraine to Malaysian experts early Tuesday. While on Monday, the U.N. Security Council unanimously demanded that armed groups controlling the crash site allow safe and unrestricted access to the wreckage.
Video

Video In Cambodia, HIV Diagnosis Brings Deadly Shame

Although HIV/AIDS is now a treatable condition, a positive diagnosis is still a life altering experience. In Cambodia, people living with HIV are often disowned by friends, family and the community. This humiliation can be unbearable. We bring you one Cambodian woman’s struggle to overcome a life tragedy and her own HIV positive diagnosis.

AppleAndroid