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

Polls Open in Scotland Independence Vote

As race to persuade undecided voters continues, 'No' voters say they believe life in Scotland will slowly improve, 'Yes' vote not worth the risk More

South Africa’s 'Open Mosque' Admits Everyone, Including Critics

Open Mosque founder plans to welcome gay worshipers and allow women to lead prayers More

Ukrainian Activist in Despair About Future of Her Country

IrIna Dovgan, accused of being a spy and tortured by pro-Russian separatists, is appealing to UN Human Rights Council to support her country 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.
A Dinosaur Fit for Land and Wateri
X
September 17, 2014 8:44 PM
Residents and tourists in Washington D.C. can now examine a life-size replica of an unusual dinosaur that lived almost a hundred million years ago in northern Africa. Scientists say studying the behemoth named Spinosaurus helps them better understand how some prehistoric animals adapted to life on land and in water. The Spinosaurus replica is on display at the National Geographic museum. VOA’s George Putic has more.
Video

Video A Dinosaur Fit for Land and Water

Residents and tourists in Washington D.C. can now examine a life-size replica of an unusual dinosaur that lived almost a hundred million years ago in northern Africa. Scientists say studying the behemoth named Spinosaurus helps them better understand how some prehistoric animals adapted to life on land and in water. The Spinosaurus replica is on display at the National Geographic museum. VOA’s George Putic has more.
Video

Video Iraqi Kurdistan Church Helps Christian Children Cope find shelter in churches in the Kurdish capital, Irbil

In the past six weeks, tens of thousands of Iraqi Christians have been forced to flee their homes by Islamic State militants and find shelter in churches in the Kurdish capital, Irbil. Despite U.S. airstrikes in the region, the prospect of people returning home is still very low and concerns are starting to grow over the impact this is having on the displaced youth. Sebastian Meyer reports from Irbil on how one church is coping.
Video

Video NASA Picks Boeing, SpaceX to Carry Astronauts Into Space

The U.S. space agency, NASA, has chosen Boeing and SpaceX companies to build the next generation of spacecraft that will carry U.S. astronauts to the International Space Station by the year 2017. The deal with private industry enables NASA to end its dependence on Russia to send space crews into low Earth orbit and back. Zlatica Hoke has more.
Video

Video Future of Ukrainian Former President's Estate Uncertain

More than six months after Ukraine's former President Viktor Yanukovych fled revolution to Russia, authorities have yet to gain control of his palatial estate. Protesters occupy the grounds and opened it to tourists but they are also refusing to turn it over to the state. VOA's Daniel Schearf reports from Mezhigirya, just north of Kyiv.
Video

Video China Muslims Work to Change Perceptions After Knife Attacks

China says its has sentenced three men to death and one woman to life in prison for a deadly knife attack in March that left more than 30 dead and 140 injured. Beijing says Muslim militants from China's restive western region of Xinjiang carried out the attacks. Now, more than six months after the incident, residents in the city are still coping with the aftermath. VOA's Bill Ide has more from Kunming.
Video

Video Enviropreneur Seeks to Save the Environment, Empower the Community

Lorna Rutto, a former banker, is now an ‘enviropreneur’ - turning plastic waste into furniture and fences discusses the challenges she faces in Africa with raw materials and the environment.
Video

Video West Trades Accusations Over Ransoms

As world leaders try to forge a common response to the threat posed by Islamic State militants in Iraq and Syria, there is simmering tension over differing policies on paying ransoms. In the past month, the jihadist group has beheaded two Americans and one Briton. Both countries refuse to pay ransom money. As Henry Ridgwell reports for VOA from London, there is uncertainty in the approach of some other European nations.
Video

Video Scotland Independence Bid Stokes Global Interest

The people of Scotland are preparing to vote on whether to become independent and break away from the rest of Britain, in a referendum being watched carefully in many other countries. Some see it as a risky experiment; while others hope a successful vote for independence might energize their own separatist demands. Foreign immigrants to Scotland have a front row seat for the vote. VOA’s Henry Ridgwell spoke to some of them in Edinburgh.


Carnage and mayhem are part of daily life in northern Nigeria, the result of a terror campaign by the Islamist group Boko Haram. Fears are growing that Nigeria’s government may not know how to counter it, and may be making things worse. More

AppleAndroid