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Friday, 16 March, 2001, 12:32 GMT
Dark clouds over Asia
stockbroker at the Bombay Stock Exchange
Indian stock brokers had a rough week as the market reeled from insider trading allegations
By the BBC's Neil Heathcote in Singapore

Dark clouds have been gathering over Asia. Markets and currencies fell dramatically during the week; the smell of crisis and recession is in the air.

What's not clear, of course, is how deep and how damaging the downturn will be. Japan released figures first thing on Monday showing it has avoided two quarters of negative growth - and so has skirted recession for now.

Japan's prime minister Mori yawning during a parliamentary debate
Japan's prime minister Yoshiro Mori is not tired of his job yet
But the politicians are in the driving seat - and seem to have no idea which way they are heading.

Prime minister Yoshiro Mori backed down over an implicit promise to stand down; the opposition put forward a censure motion; it was duly voted down. Policy drift has become the order of the day.

Following Wall Street's cue, stocks tumbled.

Emergency meeting

Senior Japanese officials convened on Thursday for an emergency meeting. Their aim - to discuss ways of propping up the stock market, as it hit its lowest level since 1984.

But events were already moving beyond their control.

Many banks are holding large potential losses on their extensive shareholdings - just the kind of situation they were hoping to avoid as they pad their books before the March year-end, and prepare for new market accounting standards being introduced in April.

The ratings agency Fitch placed the ratings of 19 banks on negative review, and stocks slumped further.

Rupiah in trouble

Riot police intervenes in Indonesian unrest
Riots and political uncertainty have undermined Indonesia's currency
The Indonesian rupiah fell to more than 11,000 to the dollar; the Australian dollar hit a record low - techstocks across Asia slumped.

Time dotCom, Malaysia's most significant IPO in years, lost 26% in value on its first day of trade.

But with Asia's biggest players in trouble, these were mere sideshows.

In Bombay, the Securities and Exchange Board investigation into the post-budget falls on the Stock Exchange rolled on.

It's all part of SEBIs efforts to end the market upheaval, which began at the start of the month and triggered the resignation of the BSE president last week.

SEBI suspended all the broker member directors of the governing board of the Exchange - following allegations that some had used their position to gain privileged information.

Later in the week it announced it was banning proprietary trading by stock exchange presidents, vice-presidents and treasurers altogether.

Whether the markets will take much cheer remains to be seen - the government itself is now in crisis over allegations of bribery and corruption - which should ensure that for the moment at least, dealers are condemned to live in interesting times.

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