Trouble is brewing in Asia again
By Paul Erdman, CBS.MarketWatch.com
Last Update: 1:35 PM ET Oct 31, 2000
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SAN FRANCISCO (CBS.MW) -- It was only a few years ago when Asia was plunged into
a currency and financial crisis that threatened to undermine the entire global economy.
It even prompted Alan Greenspan to suggest at the time that the
United States could hardly remain an island of stability in an
increasingly turbulent world.
The Asian crisis passed, thanks to massive intervention by the
IMF, supported by the US Treasury under the leadership of
Robert Rubin. As a result, both the United States and Europe
dodged that bullet.
But now trouble is again brewing in Asia.
The financial situation in Korea is getting worse by the day. The
latest victim is Hyundai Engineering, a key unit of the Hyundai
Group, Korea's second-biggest industrial group. It is now in
default on $4.5 billion of bank debt.
Dong-Ah Construction Industrial Co., a rival of Hyundai, with
$2.9 billion in debt, was refused new loans by creditors
yesterday. Daewoo Motor Co., Korea's second biggest
automaker, said it will shed a third of its Korean staff, sell assets
and cut production as it desperately seeks to stem losses to avoid
bankruptcy.
Japan chances of recovery are again fading. Its industrial
production fell 3.4 percent in September from August.
Unemployment unexpectedly moved up to 4.7 percent, extremely high by historic standards
in that country. The yen has sunk to 109 to the dollar. The stock market is at a 20-month low.
The Philippines is also in crisis mode. Its peso has slumped 11 percent to a record low of
51.95 to the U.S. dollar following Philippine President Joseph Estrada being accused, three
weeks ago, of receiving $6 million in bribes from operators of an illegal numbers game called
``jueteng.''
As capital once again starts to flee, mostly to the United States, all Asian currencies with the
exception of the Hong Kong dollar and the Chinese RMB are sinking. Even Australia's
currency is coming under serious fire.
And look at their stock markets. In dollar terms, year-to-date, Singapore has fallen 30 percent,
Taiwan, is down 34 percent, South Korea is off 49 percent, and Indonesian stocks have, on
average, lost 51 percent of their value.
These renewed rumblings of growing trouble on the other side of the Pacific Rim, combined
with this week's news that consumer confidence here in the United States plunged to the
lowest level in a year, could mean double trouble down the road in 2001. |
