Asian markets sink on US worries

21-01-2008

Asian markets sink on US worries
Stock markets in Asia dropped to their lowest close in more than two years on US recession fears.

Despite US president George Bush's announcement of a stimulus plan last Friday, the Nikkei index in Tokyo fell by 3.9 per cent, while the Hang Seng in Hong Kong trimmed off 4.9 per cent in the day's trading.

The Shanghai Composite dived to 5.1 per cent.

The stimulus package, which needs to be passed by Congress, called for tax incentives and relief for US businesses and people to the tune of $145 billion (£72.5 billion).

A weak American economy means that exporters will find less demand for their products in their top markets.

David Cohen, director of Asian economic forecasting at Action Economics in Singapore, commented in an interview: "People are certainly nervous about a potential recession in the U.S. spilling over to the rest of the world.

"Maybe there's still some wariness about politicians are to come up with a compromise and act sufficiently quickly. I think the impact would be marginal anyway."

Shareholders also disregarded signals from Federal Reserve chairman Ben Bernanke that the US central bank would cut interest rates to resuscitate the US economy.

Although many Asian countries depend on Americans to buy up their exports, increased trade and investment have made the region less reliant and many analysts predict a rebound.

Markets in Australia, India, South Korea, Singapore, Taiwan and the Philippines also closed at negative figures.

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