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Asian markets keep eyes on U.S.

Doug Krizner Mar 17, 2008


Doug Krizner: The credit crisis swelled to a dangerous level over the weekend. Bear Sterns was on the verge of bankruptcy. The potential collapse of Bear was threatening a meltdown of global financial markets. So the Federal Reserve stepped in — and basically pushed Bear into being taken over by JP Morgan.

Morgan is paying just $2 for a stock that traded at $30 last Friday, and the Fed sent a signal to the overall market by cutting the discount rate a quarter point. Now, the Fed was feeling pressure to get this deal drafted before the opening of stock markets in Asia overnight.

Let’s bring in Lindsay Whipp of The Financial Times in Tokyo. Lindsay, I see the markets down sharply, what are traders talking about?

Lindsay Whipp: Well, I think that they’re looking to see what’s happening next, they’re looking to see which financial company could go next. And because basically, everything that’s happening in Asia right now or in Japan is reliant on any news that comes out of the U.S.

Krizner: What are we seeing happening in the currency market right now, and how might that change relations between the U.S., let’s say, and exporters in Japan or other parts of the pacific rim?

Whipp: Well, it’s a very big issue in Japan, because obviously the U.S. market is their second-biggest market for the exporters. And the Yen at one point today went as high as 95.77, and they think that’s really difficult for exporters, because they become less competitive when they sell their products in the U.S. And it will, if those sort of rates continue, it will impact the Japanese economy. And so there has been a lot of talk among traders as to when, or if, the Ministry of Finance is going to intervene with the Yen. But so far, they haven’t done anything — they’ve just said the movement is not desirable.

Krizner: When we see a market in Hong Kong drop 5 percent, or a market in Australia drop by more than 3 percent, are the themes the same? Is it really concern about the strength that exporters have going forward?

Whipp: Not probably to the extent that it is in Japan, because the Japanese economy, it has been so reliant on exports and capital spending. But I think the concern probably in Hong Kong is that a lot of traders have actually expected these markets to fall, and that problems . . . haven’t been priced into those markets yet. And some expect them to fall further.

Krizner: Lindsay Whipp is markets reporter for The Financial Times. She’s speaking to us this morning from Tokyo. Lindsay, thanks so much.

Whipp: Thank you.

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