Stocks rebounded yesterday in Asia as world leaders headed to Washington to craft a joint strategy to tackle the worst financial crisis in decades and thwart a deep global recession.
A slew of gloomy data raised the stakes for the leaders of the Group of 20 major rich and developing countries ahead of the key summit.
“The G20 will need to deliver some good news or we’ll see a sharp drop in stocks on Monday,” NAB Capital strategist John Kyriakopoulos warned.
Japanese Prime Minister Taro Aso was to tell world leaders his country was ready to lend up to US$100 billion to the IMF for financial lifelines to crisis-hit emerging countries, his government said.
The gains in stocks came despite another raft of bleak economic news.
France narrowly avoided following Germany into recession, but its economy barely grew in the third quarter, while a plunge in new car sales in Europe signaled tough times ahead.
French-Belgian bank Dexia posted a 1.54 billion euro (US$1.96 billion) quarterly loss, while the BBC reported that Royal Bank of Scotland would cut about 3,000 jobs worldwide.
Asian markets snapped a three-day losing streak as investors scooped up beaten-down stocks, but analysts warned the outlook remained bleak as fears mounted of a long and deep global economic downturn.
“The rally is just driven by bargain hunting after the sharp dips,” said Kazuhiro Takahashi, general manager at Daiwa Securities SMBC in Tokyo.
Japan’s Nikkei index ended 2.72 percent higher, while Sydney finished with a gain of 1.4 percent and Shanghai rose 3.05 percent.
The yen rose as currency dealers fretted over the US economy. The dollar slipped to ¥97.12, down from ¥97.67 in New York late on Thursday. The euro dropped to US$1.2736 from US$1.2779.
“There was no logical reason as to why shares rose, and worries remain over how the US will handle the financial crisis,” said Yosuke Hosokawa, chief forex strategist at Chuo Mitsui Trust Bank.
The rebound in stocks came despite data showing a steep drop in both imports and exports in the US, highlighting the slowdown in the world’s biggest economy.
Germany on Thursday announced its economy, Europe’s biggest, had fallen into recession in the third quarter.
But France narrowly avoided slipping into recession in the third quarter of this year with growth of 0.14 percent compared with the second quarter, Economy and Finance Minister Christine Lagarde said.
China, which recently announced a US$586 billion stimulus package, said its economy remained fundamentally strong and should maintain fast growth, playing down concerns over a slew of weaker data this week.
“The origin of the financial crisis is outside the country and its impact on our financial system is limited. The fundamentals of our economy are still good,” Chinese National Development and Reform Commission Vice Chairman Mu Hong (穆虹) said.
The current financial crisis is rooted in the so-called subprime loans in the US — mortgages to buy houses and other forms of credit extended to underqualified consumers with less than solid credit histories.
The G20 summit, which was to start yesterday with a working dinner at the White House, is expected to set down a number of economic goalposts and a dateline to prevent the ongoing financial meltdown from turning into a lengthy recession.
“The leaders attending this weekend’s meeting agree on a clear purpose: To address the current crisis and to lay the foundation for reforms that will help prevent a similar crisis in the future,” US President George W. Bush said on Thursday.
‘ONE BRIDGE’: The US president-elect met with Akie Abe on Dec. 15 in Florida and the two discussed a potential Taiwan-China conflict’s implications for world peace US president-elect Donald Trump has described Taiwan as “a major issue for world peace” during a meeting with Akie Abe, the widow of late Japanese prime minister Shinzo Abe, Japanese newspaper the Yomiuri Shimbun quoted sources as saying in a report yesterday. Trump met with Akie Abe on Dec. 15 at the Mar-a-Lago estate in Florida, where the two discussed the Russo-Ukrainian war and the situation in the Taiwan Strait. During the meeting, Trump spoke on the implications for world peace of a potential Taiwan-China conflict, which “indicated his administration’s stance of placing importance on dealing with the situation in
ALLIANCE: Washington continues to implement its policy of normalizing arms sales to Taiwan and helps enhance its defense, the Ministry of Foreign Affairs said US President Joe Biden on Friday agreed to provide US$571.3 million in defense support for Taiwan, the White House said, while the US State Department approved the potential sale of US$265 million in military equipment. Biden had delegated to the secretary of state the authority “to direct the drawdown of up to US$571.3 million in defense articles and services of the Department of Defense, and military education and training, to provide assistance to Taiwan,” the White House said in a statement. However, it did not provide specific details about this latest package, which was the third of its kind to
CONSIDERING OPTIONS: Lai’s office said he regrets, but respects the outcome, and his administration is looking at all legal and constitutional means to maintain democracy The Legislative Yuan yesterday rejected all seven nominees for the Constitutional Court, an expected outcome that could immobilize the court. President William Lai (賴清德) nominated the justice candidates, including the nominees for the president and vice president of the Judicial Yuan, at the end of August. The Chinese Nationalist Party (KMT) caucus opposed all the nominees, while Taiwan People’s Party (TPP) caucus whip Huang Kuo-chang (黃國昌) said his party only approved of National Taiwan University (NTU) Graduate Institute of National Development professor Liu Ching-yi (劉靜怡). The Democratic Progressive Party (DPP) caucus opposed the appointment of Liu, but approved the other nominees. As defenders of
Taiwan People's Party (TPP) Chairman Ko Wen-je (柯文哲) faces a jail sentence of up to 28.5 years after being indicted today on bribery charges and other forms of corruption, in connection with real estate dealings during his second term as Taipei mayor from 2018-2022. He was also charged for suspected involvement in irregularities in his party's campaign finances during the 2024 presidential election which he ran as a candidate in. Prosecutors are seeking a total sentence of 28.5 years for Ko, comprising 15 years for bribery, 5 years and 6 years for separate cases of embezzlement and 2.5 years for breach of
RSS