Asian stocks sink on economic concerns - Views on News from Equitymaster

Helping You Build Wealth With Honest Research
Since 1996. Try Now

  • MyStocks

MEMBER'S LOGINX

     
Login Failure
   
     
   
     
 
 
 
(Please do not use this option on a public machine)
 
     
 
 
 
  Sign Up | Forgot Password?  

Asian stocks sink on economic concerns

Nov 7, 2008

European central banks slash rates
Asian markets are trading in the red currently. Major losses are being seen in the benchmark indices of Japan (down 4.4%), Hong Kong (1.8%) and Singapore (2.3%). These markets seem to have fallen in line with the weak performance of the US and European markets yesterday. While the US Dow Jones index closed almost 5% down, European indices traded weak within a range of 4% to 9%. Weakness in European stocks yesterday followed the spree of interest rate cuts announced by three key central banks in the region. While the European Central Bank (ECB) lowered its benchmark lending rate by 0.5% (to 3.25%), the Bank of England reduced it by 1.5% (to 3%). The central bank of Switzerland followed suit, lowering its lending rate by 0.5% (to 2%). What is more, these central banks have not ruled out a further reduction in interest rates on concerns of a deeper economic slump.

Selling pressure across Asian markets today is also on the back of some weak earning numbers reported by large corporations like Toyota. The Japanese automaker, for instance, halved its annual profit forecast yesterday. The company now expects its profits to fall almost 68% YoY during the current year.

Indian banks see liquidity problems easing
"There is no problem of liquidity at this point of time", said the chairman of India's largest bank, State Bank of India in a press meet yesterday. However he further added that there will be some pressure on liquidity next month on account of the busy season and the fact that government borrowings typically increase during this time of the year.

SBI announced a 0.75% reduction in its lending rates, which will be effective from 10th of November. The bank's management does not see the rate of growth in credit off-take slowing down during the second half of the year, as it expects the government and central bank to inject substantial cash into the financial system. SBI is one of the many public sector banks that have reduced their lending rates, after being arm twisted by the finance ministry to do so. The other banks that have reduced their lending rates by 0.75% include Bank of Baroda, Bank of India, Corporation Bank, Canara Bank, oriental Bank of Commerce, Allahabad Bank, Union Bank and Punjab National Bank.

The impact of reduction in lending rates will also be seen in the deposit rates, which are expected to come down as well. This is ironical considering that while domestic savers will have their deposit rates slashed, the government and central bank are leaving no stones unturned to attract non-resident deposits by way of increasing interest rates on their accounts. This they are doing to attract foreign capital to stop the run on the Indian rupee, which has depreciated by over 21% against the US dollar in this current calendar year 2008.


Equitymaster requests your view! Post a comment on "Asian stocks sink on economic concerns". Click here!

  

More Views on News

IDFC Mutual Fund Starts Campaign 'SIFI'. Should Buy Into the Idea? (Outside View)

Sep 23, 2020

IDFC Mutual Fund is taking the road less travelled and hence started a campaign SIFI (SIP in Fixed Income) to promote the concept of SIP for its debt funds investors.

My View on the IPO Market (Fast Profits Daily)

Sep 23, 2020

In this video, I'll share with you my thoughts on the recent spate of IPOs and what it means for the market.

I Believe These Stocks Will Deliver the Most Outsized Returns in 2021 and Beyond (Profit Hunter)

Sep 23, 2020

Rules of the racetrack can help you bag the biggest gainers of the coming decade.

An Important Hurricane Update for Energy Traders (Fast Profits Daily)

Sep 22, 2020

In this video, I'll show you how the extended hurricane season in the US will affect traders in crude oil and natural gas.

Mutual Fund Investors Will Now Be Allotted Units Based on NAV of the Day AMCs Receive Funds (Outside View)

Sep 22, 2020

PersonalFN explains how SEBI's new circular on mutual funds impact investors.

More Views on News

Most Popular

How the 8-Year Cycle Can Help Identify Multibaggers (Fast Profits Daily)

Sep 11, 2020

This is how you can apply the greed and fear cycle in the market to pick stocks.

Why We Picked This Small-cap Stock for Our Hidden Treasure Subscribers (Profit Hunter)

Sep 17, 2020

This leading household brand will profit big time in a post covid world.

This Could Be the Best September for Auto Stocks (Profit Hunter)

Sep 11, 2020

Here's why I think this month could be a great for auto stocks.

What Do the Charts Say About Buying Smallcaps Now? (Fast Profits Daily)

Sep 18, 2020

Everyone seems to be excited about buying smallcaps now...but is it the right thing to do? What do the charts tell us? Find out in this video...

More

Covid-19 Proof
Multibagger Stocks

Covid19 Proof Multibaggers
Get this special report, authored by Equitymaster's top analysts now!
We will never sell or rent your email id.
Please read our Terms

S&P BSE SENSEX


Sep 23, 2020 (Close)

MARKET STATS