Asian markets continue rise as Fed eyes recovery

TOKYO: Asian markets continued higher on Monday after US Federal Reserve chairman Ben Bernanke said America had averted another Great Depression and was already seeing the "green shoots" of economic recovery.

Resuming last week's strong rebound, Tokyo's Nikkei-225 closed up 1.78 per cent with Hong Kong 0.96 per cent higher in the afternoon session. Taipei and New Zealand also made gains with Sydney finishing 0.1 per cent stronger.

Tokyo rocketed 5.15 per cent on Friday and Bernanke's upbeat comments will do nothing to hurt the long-awaited rally in Asian share prices.

In his first television interview, the Federal Reserve chairman said no more big banks would fail and expressed confidence the world was not about to see a repeat of the 1930s Great Depression.

"I think we've averted that risk," Bernanke told CBS, adding that recovery depended on fixing the banking system.

"We're working on it. And I do think that we will get it stabilised, and we'll see the recession coming to an end probably this year," Bernanke said.

"We'll see recovery beginning next year. And it will pick up steam over time."

Last week, the blue-chip Dow Jones share index fought back from 12-year lows, while Bernanke said a government fund of US$500 billion was stabilising the mortgage market and business lending was picking up.

"And I think as those green shoots begin to appear in different markets, and as some confidence begins to come back, that will begin the positive dynamic that brings our economy back," he said.

But optimism was tempered by another raft of gloomy reports from Asia, with Singapore saying its recession will get worse this year before staging a weak recovery in the last quarter.

Gross domestic product (GDP) is likely to fall 8.5 per cent in the quarter to March from a year ago, more than double the 4.2 per cent shrinkage in the fourth quarter of 2008, according to a central bank survey.

DBS Bank said it expected February exports, which will be announced on Tuesday, plummeted 23.6 per cent year on year.

"The general expectation is that it will be another dreadful month," it said in a market commentary.

China said foreign direct investment fell nearly 16 per cent in February from a year earlier, while the Financial Times newspaper said Beijing may have lost US$80 billion in ill-timed investments of its foreign exchange reserves.

"It appears SAFE (State Administration of Foreign Exchange) began diversifying into equities early in 2007 and, rather than being deterred by the subprime crisis, it continued to buy," Brad Setser, an economist at the Council on Foreign Relations, a US-based think tank, told the paper.

The report comes after Chinese Premier Wen Jiabao said last week he was "a little bit worried" about the fate of his nation's huge investments in the United States.

Australia also moved to head off rising unemployment, now at a four-year high of 5.2 per cent, by slashing its number of foreign migrant workers for the first time in 10 years.

"We don't want people coming in who are going to compete with Australians for limited jobs," said Immigration Minister Chris Evans, announcing a 14 per cent cut in the number of skilled migrant visas.

Meanwhile the Economist Intelligence Unit said Vietnam's once-runaway economy would show almost zero growth this year. However, South Korea said it expected a record trade surplus this month thanks to plunging crude oil prices.


Source :Channel News Asia