Asian stocks, US index futures and the dollar tumbled after the Senate rejected a bailout for US automakers, threatening to deepen the global recession. Treasuries rallied and yields fell to record lows.
The MSCI Asia Pacific Index lost 3.5 percent to 84.97 as of 4:20pm in Tokyo after senators voted down a bill to provide US$14 billion in emergency funds for General Motors Corp and Chrysler LLC. Honda Motor Co and Nissan Motor Co plunged more than 11 percent. The US dollar fell to a 13-year low against the yen, while the cost of protecting Asian bonds against default advanced. Metals and crude oil prices slumped.
“Investors have been betrayed again by US politiciansm” said Yasuhiro Miyata, who helps manage about US$109 billion at DIAM Co in Tokyo. “Even with the knowledge that we are in the midst of a crisis, they were unable to come to an agreement and investors have decided to abandon ship. This could have a substantial effect on unemployment.”
AFP
Futures on Standard & Poor’s 500 Index sank 4.3 percent. The measure dropped 2.9 percent yesterday, as General Motors shares plunged 10 percent, extending an 83 percent annual decline.
Japan’s Nikkei 225 Stock Average retreated 5.6 percent to 8,235.87. The CSI 300 Index sank 3.8 percent in China, after a government official said growth will slow more sharply next quarter. China Mobile Ltd. fell 7.1 percent in Hong Kong.
South Korea’s Kospi Index lost 4.4 percent, led by KB Financial Group Inc, after the Bank of Korea said the economy will expand at the slowest pace in 11 years next year.
TAIPEI
Taiwanese shares were expected to weaken next week amid uncertainty over the US auto industry’s fate, dealers said on Friday.
Fears have escalated that a possible failure to rescue the auto sector would significantly boost the already high US unemployment rate and further drag down US demand, hurting Taiwan’s exports, they said.
Market sentiment remains cautious ahead of a US Federal Reserve Board policy meeting scheduled for tomorrow, they said.
The Taiwanese market is expected to test the 4,200 point support level next week, while any technical rebound during trade may encounter strong resistance at around 4,700 points, dealers said.
For the week to Dec. 12, the weighted index fell 256.20 points or 6.06 percent to 4,481.27 after a 5.28 percent decline a week earlier.
Average daily turnover stood at NT$85.11 billion (US$2.56 billion), compared with US$54.83 billion a week ago.
The market closed 3.74 percent lower on Friday as investors rushed to take profit after the US Senate reached no deal to keep the Big Three automakers afloat.
“I expect the selling will continue into next week as pessimism towards the US economy seems to run deeper due to the botched rescue plan,” President Securities analyst Steven Huang said.
Huang said the electronic sector may face greater pressure as it has been battered by falling US consumption.
Last month, Taiwan recorded a 23.3 percent decline in exports, marking the steepest fall since October 2001.
Other regional markets:
KUALA LUMPUR: Malaysian shares closed 0.1 percent down. The Kuala Lumpur Composite Index shed 8.41 points to close the day at 852.27 off an intraday low of 848.05.
BANGKOK: Thai share prices closed almost flat, just 0.04 percent higher.
JAKARTA: Indonesian shares ended 4.1 percent lower.
The Jakarta Composite Index fell 54.72 points to 1,261.97 in moderate volume.
MANILA: Philippine shares closed two percent lower.
WELLINGTON: New Zealand shares closed 1.82 percent lower.
The benchmark NZX-50 index fell 49.76 points to 2,676.95 on light turnover worth 70.6 million dollars (US$38.9 million).
CHIP WAR: The new restrictions are expected to cut off China’s access to Taiwan’s technologies, materials and equipment essential to building AI semiconductors Taiwan has blacklisted Huawei Technologies Co (華為) and Semiconductor Manufacturing International Corp (SMIC, 中芯), dealing another major blow to the two companies spearheading China’s efforts to develop cutting-edge artificial intelligence (AI) chip technologies. The Ministry of Economic Affairs’ International Trade Administration has included Huawei, SMIC and several of their subsidiaries in an update of its so-called strategic high-tech commodities entity list, the latest version on its Web site showed on Saturday. It did not publicly announce the change. Other entities on the list include organizations such as the Taliban and al-Qaeda, as well as companies in China, Iran and elsewhere. Local companies need
CRITICISM: It is generally accepted that the Straits Forum is a CCP ‘united front’ platform, and anyone attending should maintain Taiwan’s dignity, the council said The Mainland Affairs Council (MAC) yesterday said it deeply regrets that former president Ma Ying-jeou (馬英九) echoed the Chinese Communist Party’s (CCP) “one China” principle and “united front” tactics by telling the Straits Forum that Taiwanese yearn for both sides of the Taiwan Strait to move toward “peace” and “integration.” The 17th annual Straits Forum yesterday opened in Xiamen, China, and while the Chinese Nationalist Party’s (KMT) local government heads were absent for the first time in 17 years, Ma attended the forum as “former KMT chairperson” and met with Chinese People’s Political Consultative Conference Chairman Wang Huning (王滬寧). Wang
CROSS-STRAIT: The MAC said it barred the Chinese officials from attending an event, because they failed to provide guarantees that Taiwan would be treated with respect The Mainland Affairs Council (MAC) on Friday night defended its decision to bar Chinese officials and tourism representatives from attending a tourism event in Taipei next month, citing the unsafe conditions for Taiwanese in China. The Taipei International Summer Travel Expo, organized by the Taiwan Tourism Exchange Association, is to run from July 18 to 21. China’s Taiwan Affairs Office spokeswoman Zhu Fenglian (朱鳳蓮) on Friday said that representatives from China’s travel industry were excluded from the expo. The Democratic Progressive Party government is obstructing cross-strait tourism exchange in a vain attempt to ignore the mainstream support for peaceful development
ELITE UNIT: President William Lai yesterday praised the National Police Agency’s Special Operations Group after watching it go through assault training and hostage rescue drills The US Navy regularly conducts global war games to develop deterrence strategies against a potential Chinese invasion of Taiwan, aimed at making the nation “a very difficult target to take,” US Acting Chief of Naval Operations James Kilby said on Wednesday. Testifying before the US House of Representatives Armed Services Committee, Kilby said the navy has studied the issue extensively, including routine simulations at the Naval War College. The navy is focused on five key areas: long-range strike capabilities; countering China’s command, control, communications, computers, cyber, intelligence, surveillance, reconnaissance and targeting; terminal ship defense; contested logistics; and nontraditional maritime denial tactics, Kilby
RSS