News / Asia

Asian Markets Drop After Wall Street Reacts to Obama's Bank Limits

Multimedia

Audio

Asian stock prices have dropped in line with markets in the United States after President Obama announced plans for new limits on how banks invest.

Benchmark indexes in Australia, Hong Kong, Japan, and Seoul fell up to two and a half percent Friday. Some markets sank nearly three percent in early trading, but the losses eased in the afternoon.

President Obama said Thursday he wants to restrict banks' ability to make excessively risky investments to avoid another financial crisis.

U.S. markets drooped on the news, leading Asian stocks to follow suit.

David Cohen, director of Asian forecasting at Action Economics in Singapore, says the sell-off is just a reflex and Mr. Obama's limits on banks are not likely to have significant effects on world markets.

"A lot of it is political in the United States, revolving around the populist anger at Wall Street," he said. "And, the fact that Obama waited this long to introduce the measure I think says something to that. It's more … as much a political response to some of the problems that the Democrats have been feeling lately."

The drop on Wall Street was the second day that stocks took a tumble. Markets slumped Wednesday after China said it would reduce bank lending to slow its economy.

Chinese officials said Thursday their economy is back into double-digit growth and has recovered from the global financial crisis.

Cohen says curbs on bank lending are a logical step in view of China's rapid growth.

"The reason the policy makers in Beijing are looking to tighten policy a little bit is simply because their economy has been showing strong momentum as it entered 2010 and it just might be appropriate to withdraw some of the aggressive stimulus that they added about a year ago in a successful effort to counter the drag from the global downturn," he said.

Some economists have said China's economy was an important factor in the world avoiding a more serious economic problem.

Cohen agrees. He says the global economy is now on track to recover with Asian economies, and in particular China. in the lead.

But, he says although there is a lower chance of another financial crisis there are still risks that could shake up markets.

Cohen says there are no doubt more problems hidden in some banks and that governments still have to deal with the massive debts racked up from spending to stimulate their economies.

In the Asian markets, Australia's All Ordinaries index fell 1.6 percent, Japan's Nikkei closed down almost 2.6 percent and Seoul's Kospi lost 2.2 percent. Hong Kong's Hang Seng closed six-tenths of a percent lower, but had been down nearly three percent in the morning.
 

You May Like

Video One Year After Thai Coup, No End in Sight for Military Rule

Since carrying out the May 22, 2014 coup, the general has retired from the military but is still firmly in charge More

Video Afghan Economy Sinks As Troops Depart

Afghans are grappling with how exodus will affect country's fragile economy More

Video Scientists Say We Need Softer Robots

Today’s robots are mostly hard, rigid machines, with sharp edges and forceful movements, but researchers at Carnegie Mellon University say they should be softer and therefore safer 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.
Turkey's Main Opposition Party Hopes for Election Breakthroughi
X
May 22, 2015 10:23 AM
Turkey’s main opposition Republican People’s Party has sought an image change ahead of the June 7 general election. The move comes after suffering successive defeats at the hands of the Islamist-rooted AK Party, which has portrayed it as hostile to religion. Dorian Jones reports from the western city of Izmir.
Video

Video Turkey's Main Opposition Party Hopes for Election Breakthrough

Turkey’s main opposition Republican People’s Party has sought an image change ahead of the June 7 general election. The move comes after suffering successive defeats at the hands of the Islamist-rooted AK Party, which has portrayed it as hostile to religion. Dorian Jones reports from the western city of Izmir.
Video

Video Europe Follows US Lead in Tackling ‘Conflict Minerals’

Metals mined from conflict zones in places like the Democratic Republic of Congo are often sold by warlords to buy weapons. This week European lawmakers voted to force manufacturers to prove that their supply chains are not inadvertently fueling conflicts and human rights abuses. Henry Ridgwell reports from London.
Video

Video Class Tackles Questions of Race, Discrimination

Unrest in some U.S. cities is more than just a trending news item at Ladue Middle School in St. Louis, Missouri. As VOA’s Kane Farabaugh reports, it’s a focus of a multicultural studies class engaging students in wide-ranging discussions about racial tensions and police aggression.
Video

Video Mind-Controlled Prosthetics Are Getting Closer

Scientists and engineers are making substantial advances towards the ultimate goal in prosthetics – creation of limbs that can be controlled by the wearer’s mind. Thanks to sophisticated sensors capable of picking up the brain’s signals, an amputee in Iceland is literally bringing us one step closer to that goal. VOA’s George Putic reports.
Video

Video Afghan Economy Sinks As Foreign Troops Depart

As international troops prepare to leave Afghanistan, and many foreign aid groups follow, Afghans are grappling with how the exodus will affect the country's fragile economy. Ayesha Tanzeem reports from the Afghan capital, Kabul.
Video

Video Poverty, Ignorance Force Underage Girls Into Marriage

The recent marriage of a 17-year old Chechen girl to a local police chief who was 30 years older and already had a wife caused an outcry in Russia and beyond. The bride was reportedly forced to marry and her parents were intimidated into giving their consent. The union spotlighted yet again the plight of many underage girls in developing countries. Zlatica Hoke reports poverty, ignorance and fear are behind the practice, especially in Asia and Africa.
Video

Video South Korea Marks Gwangju Uprising Anniversary

South Korea this week marked the 35th anniversary of a protest that turned deadly. The Gwangju Uprising is credited with starting the country’s democratic revolution after it was violently quelled by South Korea’s former military rulers. But as Jason Strother reports, some observers worry that democracy has recently been eroded.
Video

Video California’s Water System Not Created To Handle Current Drought

The drought in California is moving into its fourth year. While the state's governor is mandating a reduction in urban water use, most of the water used in California is for agriculture. But both city dwellers and farmers are feeling the impact of the drought. Some experts say the state’s water system was not created to handle long periods of drought. Elizabeth Lee reports from Ventura County, an agricultural region just northwest of Los Angeles.
Video

Video How to Clone a Mammoth: The Science of De-Extinction

An international team of scientists has sequenced the complete genome of the woolly mammoth. Led by the Swedish Museum of Natural History in Stockholm, the work opens the door to recreate the huge herbivore, which last roamed the Earth 4,000 years ago. VOA’s Rosanne Skirble considers the science of de-extinction and its place on the planet
Video

Video Blind Boy Defines His Life with Music

Cole Moran was born blind. He also has cognitive delays and other birth defects. He has to learn everything by ear. Nevertheless, the 12-year-old has had an insatiable love for music since he was born. VOA’s June Soh introduces us to the young phenomenal harmonica player.

VOA Blogs