The Economy blog

The world stocks had a dramatic slide during the last week of May. It is the Asian shares that lead the way when the North Korea started the tension through the series of nuclear tests. Because of this, many analysts and economists started to wonder about the future status of the economy.

It was reported that Pyongyang had fired nuclear missiles that can reach only a few miles. The next day, when the second nuclear device was fired, international market started to criticize the action.

Many investors sold their currencies that yield high values that came from the days when they thought that the global crunch was about to end. Most of the countries in Asia including Japan fell by 0.5 percent while the stock market in the South Korea decreased by 2 percent.

Recent reports coming from the NESDB or National Economic and Social Development Board in Thailand reveal that the GDO of the country fell down by as much as 7.1 percent during the Q1 of 2009. The CSI or consumer spending index decreased for the first time. The last year that Thailand experienced such dilemma is way back 1997 when almost all of the countries in Asia had a financial turmoil.

During the Q4 of 2008, Thailand is already having a decrease in GDP as it declines more than 4 percent than the preceding quarter. They were only expecting a drop of 2 to 3 percent for the whole year of 2009. But what worries the government even more is that the decrease in the CSI which is 2.6 percent in the Q1 alone.

Will there be a hope for Thailand?

According to the Standard & Poor, best known as S&P, the crisis in the banks in America haven’t started this “new phase” yet. They were talking about the crisis that it is currently facing and they believe that it would last until the year 2013.

The popular credit rating agency also said that the banking and finance industry is currently being bombarded by support from the government. There are also other lenders who are supporting the banking industry as well and they are usually the ones who consider the sector as essential in the financial system.

Tanya Azarchs, the managing director of S&P said in a recent interview that it is needless to say that the banking industry will still experience the crunch for the next three or even four years.

In Britain, the blue chip index of the country decreased by as much as 0.6 percent recently. One of the main factors to blame is the weaker prices of the raw materials which take toll on the miners and the oil producers at the same time. However, both Centrica as well as AstraZeneca were offering their support despite the index’s plunge.

Last week, the FTSE had an increase in points by as much as 5 percent. Unfortunately, their points fell down by 26.59 points closing at 4,435.5 only.

One of the most renowned sales traders of the IG Markets said that the rally for the past few weeks was the major influence for the corrections that they recently had. Philip Gillett eve said that they are thankful because they thought that the corrections would be more serious. They are also hoping that there would be improvement in the weakening economy of UK in the next weeks.

The dealers in Taiwan recently said that the share prices in the country may become very unstable in the next weeks. According to the dealers , the recent gains have increased the valuations of the market. This resulted to a greater downside risk. Moreover, the stock market will be weaker at the same time.

After the outperformance at the bigger market, the financial sector of Taiwan may experience a heavier pressure. They are now hoping that China as well as Taiwan will have an agreement particularly on the banking exchanges. But because of the of the continuous flow of funds from foreign countries, they might get as much as 6,000 points later on.

In Malaysia, it is likely that the shares would extend the current rally according to the analysts. The rally is pumped up by the hopes that the economy will recover and the government will do something about it ASAP. The TA securities recently commented that as the momentum of the share buying starts to boom towards a higher record there are more and more players in the shares market that would possibly jump in and trigger more rallies in the following sessions.

But the TA Securities also said that it is also possible that there will be conservative investors who will be interested in taking profits.

Uncle Sam’s money regained it momentum as it ascended and left the Yen and the Euro falling during the last Asian Trade. However, analysts said that the short-term instability of the said currency may still continue especially now that most of the investors are showing that they are still yearning to take risks.

From 1.3408, the Euro went down to 1.3388 when traded at dollars. Meanwhile, the yen went down to 132.30 coming from 132.46. as for the dollar, it came from 98.78 yen and increased to 98.804 yen.

According to Dariusz Kowalczyk, the trade is now very lively that it would be hard for everyone to defy the current trend without triggering a negative effect in return. Kowalczyk is the chief investment strategist working for the financial trading firm called SJS Seymour.

There were at least 13 countries located in Southeast and East Asia that agreed to have an emergency fund worth $120 so that it would serve as the funds for liquidity to any of these countries who need assistance during the global economic crunch.

The countries included in this agreement are the following:

1. Japan

2. Philippines

3. Pacific Islands

4. Timor

5. Leste

6. Indonesia

7. Malaysia

8. Vietnam

9. Laos

10. Thailand

11. Sri Lanka

12. Cambodia

13. Maldives

The Land of the Rising Sun contributed as much as $62 billion or 6 trillion yen as part of the support funds. One analyst in Indonesia said that it is a great start in building optimism in the Asian Market.

On the other hand, Kirby Daley, the senior strategist of the Hong Kong-based company – Newedge Group said that this is no longer a surprising news. However, the confirmation of this news may give the optimists a new reason to go on with the current rally.

The index of Bovespa at the recent Sao Paulo stock trading increased by as much as 0.13% and ended up at 47,289.53 points. The Petrobras, a popular energy company also had its gain which is 0.7% and earned 29.4 reais (Brazilian real). On the other hand, the Vale (a mining giant in Brazil) increased more than 1.3 and the traded ended with 30.48 reais.

This dramatic increase in four years is because of the flocking of the investors who placed their assets on the banking shares, retailers, as well as real estate developers in the country. But it was the real estate sector that gave the biggest influence in the market rally particularly during the month of April.

During the latter part of the morning European trade, London had an increase of 1.99% while Frankfurt climbed by as much as 2 percent. Paris also had its increase of 1.72%. The growth of the goal stocks is partly because of the US gains a day before.

But Asian countries also had its share of escalation as well. This is most obvious in two countries namely Japan and Hong Kong. The country of gadgets and robot dogs climbed up to 3.94 percent while the shopping cities in Asia had a 3.77 percent increase.

However, analysts in Japan is still warning investors and alike that there is still a high probability that their economy would fall deeper than they expect it especially this 2009. Currently, they are facing a big battle against economic depression. It is said that this is the worst recession that Japan felt in several decades.