STORM warning flags are again starting to be raised in Asia.
The plummeting share and currency markets in Asia this week indicate the fragile recovery from the 1998 regional crisis, with investors taking flight in the face of currency problems and oil prices, may be weakening.
Any regional financial crisis will come at a time when Australia is looking especially vulnerable, as our dollar goes into freefall, foreign debt piles up (and gets more expensive to service with a lower dollar), monthly current account figures continue gloomy, and oil prices rise.
While price falls in Asian markets yesterday were not as dramatic as Monday's, the trend continued bearish.
In Singapore, the Straits Times Index has now seen 11 consecutive losing sessions.
Tokyo and Hong Kong contained losses to less than one per cent yesterday, with the Nikkei falling 63.03 to 16,124.19.
But the already battered Seoul market shed another 1.1 per cent, down 6.39 to 571.17.
The Jakarta Composite Index went against the trend with a pallid rise of 0.83 per cent, but this followed heavy falls all through the month.
Overall, the portents are increasingly ominous.
Ord Minnett Jardine Fleming chief economist Frank Shostak said he was worried about what was happening as growth weakened in South Korea, Thailand and Malaysia.
Dr Shostak argues that most Asian countries have done little to address the problems which caused the regional crisis - and this time Australia is beset with its own concerns.
"Should everything happen again to Asia, then we won't have it as easy as in 1998," he said.
The World Bank on Monday said it was concerned Asia still faced the danger of a new downturn in spite of its strong recovery. Its East Asia chief economist Masahiro Kawai said in Tokyo that Asian countries were still burdened with a crisis legacy of heavy debt, skittish investors, and household insecurity.
"If demand should suddenly collapse, companies that can now pay their debt and are beginning to invest could quickly go under," he said.
The Philippine peso, Indonesian rupiah, and Thai baht have seen big falls in the currency values through 2000.
Oil spooks investors
By Andreea Papuc and Nigel Wilson
20sep00
A SURGING oil price and robust US
dollar have slashed the value of the
Australian dollar and sent local stocks
spiralling as investors fear an
outbreak of inflation at a time of
slowing profit growth.
There was a modest reprieve for the
Australian dollar but not before it fell
to a historic low of US54.07c in
overseas trading on Monday on
selling by offshore funds.
The prospect of another Asian crisis, oil at $US37 a barrel and diving US stocks slashed another 1.2 per cent off the share market, crowning the largest three-day loss since May 11.
The benchmark S & P/ASX 200 slumped 39.7 points to close at 3236.7, the lowest close since June 28.
The all ordinaries index plunged 39.80 points to 3188.20.
"It's a combination of high valuations, concern about oil prices and what they might do to profits and inflation," UBS Warburg chief equities strategist Sakthi Siva said.
The decline was led by The News Corporation Ltd and the banks. Technology and media stocks, led by News, which last week surged to a six-month high, and Cable & Wireless Optus, led the decline after a nearly 3 per cent drop in the Nasdaq on Monday.
Telstra also fell 1c to $5.99 and the instalment receipts lost 2c to $2.96. The big four banks fell. Bank shares are hurt by the prospect of rising interest rates.
Asian markets fell for a second consecutive day. The Dow Jones industrial average lost more than 1 per cent.
Investors are becoming more risk averse, anxious that a weak dollar and higher oil prices will eventually seep into consumer prices, prompting central banks to lift interest rates.
With oil production from OPEC members running at about 29 million barrels a day and with refinery capacity and shipping tight, analysts believe there is every chance prices will stay high.
"There is no logic to the current market," Bryan Nye, executive director of the Australian Institute of Petroleum said yesterday.
On Monday, crude oil surged almost 3 per cent, rising above $US37 a barrel for the first time in 10 years.
There were also renewed fears that tensions between Iraq and Kuwait could lead
to the disruption of output from the Persian Gulf, source of about a third of the world's oil ...