Asian Markets React To Wall Street's Carnage
RENEE MONTAGNE, host:
After the sell-off on Wall Street, it was almost inevitable that markets overseas would plunge as well. And they did. In Asia, stock markets ended as much as five to six percent lower. Governments in the region tried to calm markets with reassuring words and with cash infusions. NPR's Anthony Kuhn reports from Beijing.
ANTHONY KUHN: Asia's markets fell even more sharply than Wall Street did yesterday, with Japan's and Hong Kong's markets down between five and six percent. Japan's number two lender, the Mizuho Financial Group, loaned Lehman Brothers 289 billion dollars. Mizuho saw its stock drop 10 percent today. Japan's Central Bank responded to the rout by pumping billions of dollars into its banking system. Central Banks in Australia and India followed suit.
South Korea's and Hong Kong's governments promised to intervene in the markets if necessary. Yesterday, China tried to calm its stock and property markets with the first interest rate cut in six years. China's fiscal position is generally strong, and it's managed to avoid too much damage to its banking system. One problem is that it holds 376 billion dollars worth of Fannie Mae and Freddie Mac bonds. Fraser Howie is a Singapore-based financial analyst.
Mr. FRASER HOWIE (Financial Analyst, CLSA Securities): China is also extremely exposed to the world economy. And so I think they're also thinking, well, hold on, how do we, going forward, make our assets more productive? Simply holding foreign currencies or foreign bonds or something is probably not too good a strategy. We've got to make our assets works for us, at it were.
KUHN: Chinese banks have been selling off Fannie and Freddie bonds in recent months. That trend is expected to continue. Anthony Kuhn, NPR News, Beijing. Transcript provided by NPR, Copyright NPR.