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.
The number of people from Hong Kong applying for residency in Taiwan last year rose 41 percent from a year earlier to 5,858, National Immigration Agency statistics showed. The statistics also showed that 600 applications were filed by Hong Kong residents in the first quarter of this year — three times the number filed in the same period last year — with applicants apparently not deterred by the COVID-19 pandemic. Just one day after it was reported that the Chinese government plans to enact new national security laws in Hong Kong, inquiries regarding immigration to Taiwan grew 10-fold, a Hong Kong-based immigration
‘BEGINNING OF THE END’: Democracy advocate Joshua Wong urged Hong Kongers to stand up and fight, and let the Chinese government know that they will not cave Hong Kong protesters yesterday battled with riot police in busy downtown areas, showing their opposition toward China’s dramatic move to crack down on dissent in the biggest demonstration since the coronavirus swept through the territory in January. Police deployed a water cannon and fired tear gas in the Causeway Bay shopping area after hundreds of protesters had gathered to oppose new national security legislation from China. Police warned the crowd they were taking part in an illegal gathering, and later said in a statement that “rioters threw umbrellas, water bottles and other objects at them.” At least 120 people were arrested,
‘TAIWAN IS SAFE’: As there have been no new local cases for 42 days, people should feel free to travel around the nation — as long as they follow disease prevention rules No new cases of COVID-19 were reported yesterday and only 20 of the people hospitalized after testing positive are still being treated in hospitals, Minister of Health and Welfare Chen Shih-chung (陳時中) said yesterday in Pingtung County’s Kenting (墾丁) as he promoted a “new disease prevention lifestyle” for the nation. As yesterday was the 42nd consecutive day with no new domestic cases, and experts consider 28 consecutive days with no domestic case — the span of two incubation periods — a sign that a community is relatively safe, Taiwan is safe, said Chen, who heads the Central Epidemic Command Center (CECC),
SMOOTHER TRANSIT: Japan Airlines reportedly planned to land the flight at Haneda Airport, but changed it to Narita for direct flights to Taiwan The Ministry of Foreign Affairs yesterday thanked Japan for allowing 94 Taiwanese on a chartered plane evacuating others stranded in Russia, where COVID-19 cases are rising and many international flights have been canceled. Ninety-four Taiwanese exchange students and expats, as well as two Russian spouses, arrived at Narita International Airport in Japan yesterday morning on a charter flight operated by Japan Airlines, before taking a transfer flight to Taiwan Taoyuan International Airport last night, ministry spokeswoman Joanne Ou (歐江安) said. As of press time last night, Russia had reported more than 362,000 cases of COVID-19, including more than 3,800 deaths. The government had