Australia can withstand market shocks: PM
Australia's prime minister and treasurer on Thursday both talked up
the economy's ability to withstand the shockwaves from the US credit
crunch as the local stockmarket plunged.
In mid-session, the benchmark SP/ASX 200 index was down 5.0 percent
as investors dumped shares on fears over the subprime mortgage sector in
the US.
"My assessment is the Australian economy remains very strong, and we
should be reassured about that," Prime Minister John Howard told
journalists in Canberra. Howard said Australia did not have anything
like the same number of subprime loans as the US, although the number
had grown. "Yes there is an adjustment going on and there is no way we
can escape some impact, we have seen it already, world financial markets
are inter-connected," he said.
"Our financial institutions are very stable and the underpinnings are
such that we are better able to handle changes and shocks of this kind
than we would otherwise be," he said. Treasurer Peter Costello said that
while the fallout on financial markets from defaults in the US subprime
mortgage market was significant, local banks were well capitalised.
"The banking sector is very well capitalised, there is a lot of
liquidity and we have in place arrangements to ensure there is
sufficient liquidity," Costello told the Australian Broadcasting
Corporation.
"The fall-out from the United States is significant, it is not only
affecting global equity markets, but it is affecting credit markets, and
it is leading to a re-pricing of risk," he said.
But he did not expect higher borrowing costs in the US would result
in higher mortgage rates.
"There is no reason whatsoever why there should be any change in
relation to the banking system," he said.
"The banks are well capitalised, profitable and there is no reason
whatsoever that they should be affected."
AFP
Taiwan names computer chief as APEC envoy
TAiwan President Chen Shui-bian has named a business leader as his
envoy to the APEC summit in Australia, his office said Thursday, after
his previous choice was reportedly blocked by China.
Stan Shih, the founder of leading personal computer vendor Acer Inc,
will represent Taiwan at the Asia-Pacific summit in Sydney from
September 8-9.
Taiwanese presidents, barred from APEC summits due to objections by
China which regards the island as part of its territory, are usually
represented by local senior economic advisers or business leaders.
"Chairman Shih is a distinguished entrepre- neur ... and his
achievement is widely recognised by the business sector and the
international community," a presidential statement said.
However, Shih was not the president's first choice, according to
reports in Taipei which said Chen originally picked former vice premier
Tsai Ing-wen.
Local media said Beijing opposed Tsai because she was the architect
of a "special state-to-state" policy theory adopted by Taiwan's then
president in 1999.
Beijing regarded that definition as a move toward independence.
Taiwan was forced to use the name Chinese Taipei when joining APEC in
1991 after Beijing insisted it had no right to join world bodies as a
country.
China and Taiwan split at the end of a civil war in 1949.
AFP
Japanese stocks plunge below 16,000 points
Japanese stocks plunged below the key 16,000 points level Thursday
for the first time in almost nine months as a wave of selling hit Asian
markets, dealers said.
Tokyo's benchmark Nikkei-225 index slumped by as much as 616.10
points or 3.74 percent to 15,859.50, the lowest level since November 28.
The index later recovered slightly to 15,911.00 points, down 564.60
points or 3.43 percent on the day.
Stock markets around Asia suffered sharp plunges as investors
remained extemely nervous that more bad news might emerge from US credit
markets.
Investors have been shifting funds into less risky assets in recent
days as fears that a credit crunch is looming intensifies.
Among the hardest-hit were banking stocks, because of concern about
the exposure of Japanese banks to the subprime mortgage market in the
US.
AFP
Fed opens cash spigot as mortgage lenders reel from credit crisis
The Federal Res- erve injected more cash into the stressed US
financial system Wednesday as some mortgage lenders said they were
reeling from a broadening credit crisis.
A credit crunch and increased stock market volatility has hit some
major Wall Street banks in the past week, and tightening credit
conditions appear to be swamping the wider business landscape. Home
improvement retailer Home Depot said it had delayed a potential 10.3
billion dollar sale of its wholesale supply business to three private
equity firms until late August.
But financial strategists are urging rattled investors not to panic
amid the ongoing turbulence, as the Fed stepped in again to shore up
confidence and keep the banking system from gumming up.
The central bank said it had pumped seven billion dollars into the
financial system, in a vast 69-billion-dollar intervention operation
since Thursday.
The Fed acted after the chief executive of Thornburg Mortgage, Larry
Goldstone, told the CNBC business television channel late Tuesday that
the industry was experiencing a "credit crisis." Thornburg, a nationwide
lender, has seen its stock plummet and its finances ravaged by the
credit market upheavals.
Goldstone voiced confidence that Thornburg would not go out of
business like dozens of other US mortgage firms in recent months as
mortgage-related losses mount. KKR Financial Holdings, an affiliate of
private equity giant Kohlberg Kravis Roberts Co., said Wednesday it
would lose 40 million dollars from the sale of a mortgage portfolio, but
warned its losses may swell to 290 million dollars.
A persistent housing slump and rising property foreclosures have
unleashed a financial storm which has seen investors shun
mortgage-backed securities and other risky investments.
AFP
|