The Philippines is just a cluster of dots in the economic map. But if recession befalls the US, I think we are the most unbuffered. We need to integrate ourselves to markets other than the US so that we will not catch a cold everytime they sneeze.
Asia Markets Sink Amid Pessimism Over USMonday January 21, 1:28 am ET
By Carl Freire, Associated Press Writer
Asian Markets Sink Amid Pessimism Over US Stimulus Plan; Japan's Nikkei Tumbles 3.4 Percent TOKYO (AP) -- Asian shares fell broadly Monday morning following declines on Wall Street last week amid investor pessimism over the U.S. government's plan to prevent a recession.
A contraction in the American economy would likely hurt profits at Asian exporters, although increased trade and investment within the region has made Asia less dependent on the U.S. than in the past.
ADVERTISEMENT
Investors sold off shares, appearing to be unimpressed by the economic stimulus plan President Bush announced Friday. The plan, which requires approval by Congress, calls for about $145 billion worth of tax relief to encourage consumer spending.
Japan's benchmark Nikkei 225 index slid 3.4 percent in morning trading to 13,395.28 points, while Hong Kong's Hang Seng index was down 2.3 percent at 24,624.14.
Markets in China, India, South Korea, Australia, Singapore, Taiwan and the Philippines were also down.
"People are certainly nervous about a potential recession in the U.S. spilling over to the rest of the world," said David Cohen, Director of Asian Economic Forecasting at Action Economics in Singapore.
"Maybe there's still some wariness about politicians are able to come up with a compromise and act sufficiently quickly" on a stimulus package, Cohen said. "I think the impact would be marginal anyway."
On Friday, the Dow Jones industrial average slid 0.5 percent to 12,099.30, and some analysts warned that the U.S. market could be in for a period of protracted declines.
Investors also have shrugged assurances from Federal Reserve Chairman Ben Bernanke that the central bank is ready to act aggressively -- which means a likely big interest rate cut later this month -- to help support an economy pummeled by devastation in the housing and credit markets.
Worries about the U.S. economy -- the world's biggest -- have dragged on Asian markets, many of which surged last year. Since the start of the year, Japan's benchmark index has declined more than 12 percent, while Hong Kong's blue-chip index is down more than 11 percent.
Still, increased trade and investment within Asia has made the region less reliant on the United States than in the past, prompting some analysts to predict that Asia won't suffer dramatically from a U.S. recession.
Excluding Japan, 43 percent of Asia's exports go to other nations in the region, Lehman Brothers calculates, up from 37 percent in 1995.
A drop of 1 percentage point in U.S. economic growth would shave 1.3 percentage points from China's growth rate due to lower exports, Citigroup estimates. But China's economy will still likely expand 11 percent this year, the investment bank predicts.
Also, some strategists say Asian markets are now oversold and will rebound as investors snatch up stocks that have fallen to attractive levels.
"We hold our view that the rapid correction in the past two weeks is offering a good opportunity to buy quality stocks," Taifook Research in Hong Kong said in a note.
Linkback:
https://tubagbohol.mikeligalig.com/index.php?topic=8743.0
