English | 中文版 |  Русский

Breaking News:

Source: www.asiaecon.org |

ASIA'S STOCK MARKETS RECOVER AFTER FOUR DAY TUMBLE


Asian stock markets reacted positively climbed today to hopes of domestic markets adjusting to fiscal and monetary policies. Major stock indexes in China, Japan, and Indonesia all gained after a four day tumble, although there is skepticism as to how long the rebound will last.


Asian stock markets reacted positively climbed today to hopes of domestic markets adjusting to fiscal and monetary policies. Major stock indexes in China, Japan, and Indonesia all gained after a four day tumble, although there is skepticism as to how long the rebound will last.

China’s stock markets climbed in reaction of announcements of Government policies that are being put in place to assist domestic businesses. The Chinese Government has been focusing on strengthening its technology sector and has recently reported that it will be implementing plans to help these businesses. Companies such as China National Software and Founder Technology Group Corp, whose shares rose 10 percent and 4.1 percent respectively, represent increased confidence for China’s investors.

Chinese officials also reported that they are focusing their attention on maintaining the same levels of export tax rebates, which will assist companies that are heavily reliant upon international trade. They will also be focusing on creating policies that will help boost domestic demand, including policies that will encourage domestic steel takeovers.

Asian markets were further helped by news of the weakening Japanese yen. The yen has been continually gaining strength against foreign currencies since last August. The increased strength of the yen has only hurt Japan’s trade markets, leading to an 80 percent decrease in the total trade surplus. News of the weakening yen has assured investors that export earnings should increase, although many are skeptical that the benefits will be long-lived.  

The Chief Manager at Shinkin Asset Management Co. commented on the falling value of the yen, saying “Though a weaker yen undoubtedly improves exporter’s earnings, this trend is probably short-lived…. the yen’s depreciation isn’t necessarily positive this time, as investors are deeply skeptical about the economy’s fundamentals”.    

News of the falling yen helps companies that are heavily reliant on exports. Shares of Toyota Motor Corp. increased by 2 percent upon arrival of the news, primarily because 37 percent of their sales are in North America, according to Bloomberg.

Japan’s stock markets have been crippled by the increasing number of companies that filed for bankruptcy. The Japanese Government announced earlier this year that it will spend over ¥1 trillion ($10.7 billion) in order to help alleviate the financial pressure and restore investor confidence. This will be the first time that the Bank of Japan will buy corporate bonds. 

Although confidence in Asian markets has slightly rebounded, new predictions of job losses in 2009 will only suppress any confidence gained. The International Labor Organization (ILO) recently reported that 7.2 million jobs are expected to be lost in Asian countries in 2009, according to BBC. The ILO added that governments will need to focus on policies that create jobs in order to produce the 51 million new jobs that well be needed in the next to years.

The global economic crisis has crippled Asia’s stock markets over the past two years. Central banks all over Asia have nearly dropped their over-night borrowing rate to zero while governments have been implementing stimulus package that they hope will spur economic activity. Although news of fiscal and monetary policies has bolstered investor confidence in Asian stock markets, long term growth in these markets will be dependent on the success of these policies.


Source: Asiaecon.org
Please send comments and constructive suggestions to Feedback@AsiaEcon.org

Source: www.asiaecon.org |


More Special Articles - Asia Business & Economy Articles