More open now, but still less exposed to troubles

By Ravi Velloor, South Asia Bureau Chief

NEW DELHI, INDIA: A decade ago when Asia was in financial and economic turmoil, India watched from the sidelines. Its economy continued to grow, its currency was walled in and its stock markets were relatively unexposed to the gyrations happening in the East.

But this is a different India.

Foreign institutional investors are key players in its stock markets, foreign direct investment this year is projected to touch US$40 billion (S$57 billion) and the world's No. 1 motorcycle manufacturer is a joint venture outside New Delhi with the name Hero Honda.

China acts to cushion the stock market

By Sim Chi Yin, China Correspondent

BEIJING, CHINA: China's economy seems relatively insulated from the growing global financial turmoil so far, say economists, even as a worried Beijing took a series of unprecedented steps to stabilise its financial market this week.

Chinese stocks soared almost 9.5 per cent yesterday in response to the official measures, and as overseas equities rebounded and quelled worries over the global financial system.

On Thursday, Beijing announced after the markets closed that Central Huijin, an arm of the country's sovereign wealth fund (SWF), would help stabilise the stock market by buying shares in listed companies, including three top state-owned banks - Industrial and Commercial Bank of China, Bank of China and China Construction Bank.

Impact so far not as severe as in 1997

From Straits Times Bureaus

POLICYHOLDERS in a number of Asian countries have breathed a sigh of relief at assurances that their investments in insurer AIG were safe.

Regulators and local authorities from Malaysia to Thailand have been at pains to assuage investors's concerns about the safety of AIA, an AIG subsidiary.

'I don't think this turbulence will affect me now,' Ms Thitiwan Chankao, a 30-year-old office worker in Bangkok told The Straits Times yesterday.

Exports expected to take a hit

By Kwan Weng Kin, Japan Correspondent

TOKYO, JAPAN: Japan's economy is expected to slow in the wake of the global financial crisis with consumer spending and exports both likely to be hit.

But the collapse of Lehman Brothers, a bank that had extensive dealings with Japanese firms, is not expected to have a major impact.

Exporters, however, will feel the pinch from the contraction of the US economy and moves by American consumers to tighten their wallets.

Growth forecast lowered

By Lee Tee Jong, South Korea Correspondent

SEOUL, KOREA: The global financial turmoil has hit South Korea hard with major institutions revising their economic growth projections for Asia's fourth-largest economy.

The Asian Development Bank on Tuesday cut its forecast for South Korea's economic growth for this year to 4.6 per cent from 5 per cent, days after the International Monetary Fund revised its forecast from 4.2 per cent to 4.1 per cent.

'The growth of exports, the main pillar of the South Korean economy, can drop to the 10 per cent range in the second half of this year, down from 20 per cent during the first half, as the economies of Korea's main export markets get hit,' said Mr Huh Chan Guk of the Korea Economic Research Institute.

4% to 5% growth forecast remains

HONG KONG'S Financial Secretary John Tsang said yesterday that the government would stick to its forecast of 4 to 5 per cent growth this year despite the financial upheaval.

Mr Tsang said the economy remained fundamentally sound however things would be more difficult next year and unemployment may rise in coming quarters.

The Hang Seng rocketed 9.6 per cent yesterday to snap seven days of declines. It was lifted by a market support package in China and prospects of a US government plan to fix the credit crisis.

Chinese state media had reported that the country's sovereign wealth fund would help stabilise the stock market by buying shares in listed companies, including the three top state-owned banks.

The Hang Seng jumped 1,695.27 points to end at 19,327.73, 18.4 per cent up from Thursday's 26-month low of 16,283.72.

'It's quite extraordinary...We saw some of the world's largest companies gaining close to 20 per cent,' said Mr Howard Gorges of South China Brokerages. 'What is good for China is good for Hong Kong even though we are not out of the woods on the global economic situation or financial market troubles.'

On Thursday, Hong Kong's central bank injected HK$1.556 billion (S$286 million) into the interbank market to ensure sufficient liquidity as credit markets tightened. The move followed similar actions by other central banks in the region, although Mr Tsang said the crisis had not sparked any large capital outflows.

Meanwhile, AIA Hong Kong, a unit of troubled insurer AIG, has seen 2,000 policy terminations, Sing Tao Daily reported. --REUTERS

Shaken, but no major damage

By Ho Ai Li , Taiwan Correspondent

TAIPEI, TAIWAN: The trouble on Wall Street will test Taiwan's already fragile financial sector, but is otherwise not expected to cause major damage, say analysts.

The stock market fell to its lowest in three years earlier this week, affected by news of Lehman Brothers' bankruptcy.

Taiwan's total exposure to Lehman is about NT80 billion (S$3.6 billion), with Shin Kong Financial Holding and Mega Financial Holding among the worst hit.

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