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Friday, 21 September, 2001, 10:48 GMT 11:48 UK
Week of turmoil for Asian markets
Rudy Schlais, General Motors Corp. Asia-Pacific President (r) shakes hands with Lee Jong-dae, Daewoo Motor Chairman of South Korea (l)
GM signed a non-binding agreement to acquire Daewoo
By the BBC's Bridget Fallon from Singapore

The only story in Asia this week was the financial markets, and in particular how US shares would react for the first time to the terrorist attacks which shook America.

US stocks fell when they re-opened on Monday. But it was felt the decline could have been a lot steeper and, on Tuesday, Asian investors started buying again.

A floor trader at the Hong Kong Stock Exchange takes a close look at his screen
Traders hoped they had seen the worst of the stock losses
Central bankers across Asia took their cue from Alan Greenspan and cut interest rates in an effort to shore up investor confidence.

The Bank of Japan loosened monetary policy and cut its discount rate from 0.25% to 0.1%.

The Bank of Korea brought the cost of borrowing down by 50 basis points to an historic low of 4%, and the Reserve Bank of New Zealand followed suit with a 0.5 % cut.

New WTO members

China and Taiwan were given the go-ahead to join the World Trade Organisation at meeting in Geneva.

China and Taiwan have been in negotiations with the WTO for 15 and nine years respectively.

WTO members need in November to rubber stamp the membership recommendations.

Airline industry suffers

Shares in Asian airlines were hit by news that insurers were cutting war risks cover following the terrorists attacks.

The move represented a further blow to an industry already suffering.

Qantas Airways was the first to announce it had renegotiated its insurance deal. The Australian flagship carrier's new cover will restrict liability for passenger deaths or injuries on a plane to $2bn dollars per occurrence.

Singapore Airlines said it would also pass on higher premiums by charging passengers $1.25 extra.

In Australia, the government said it would give workers at the country's second biggest airline - Ansett - $200m of compensation.

The move followed the finding by Ansett's parent firm, Air New Zealand, that it could no longer support the carrier.

3G give-away

On Thursday, Hong Kong announced it was abandoning its auction for awarding licences for third-generation (3G) mobile phone airwaves.

There were only four bidders in the race for four licences - so an auction was unnecessary.

As expected, Hong Kong's top-three mobile firms, Hutchison Whampoa, CSL, and SmarTone Telecommunications all bought licences.

The only surprise buyer was Sunday Communications, Hong Kong's smallest carrier.

Recession fears

Japan appeared to be teetering on the verge of its fourth recession this decade.

On Thursday, the world's second largest economy saw its trade surplus in August plunge 47% from a year ago - to $2.7bn dollars.

The US is Japan's biggest trading partner, and last week's terrorist attacks on America are expected to hurt Japan's exports further.

General take-over

And on Friday came news that General Motors was finally ready to take over part of South Korea's Daewoo Motor.

The move followed a year of intense negotiations.

GM is to pay $400m dollars for a 67% stake in a new firm that will run Daewoo Motor.

GM will control two of Daewoo's domestic plants, as well as smaller factories in Egypt and Vietnam.

But the fate of other overseas plants, including those in Poland and India, remains unclear.

The world's largest mobile phone company, Vodafone has launched an agreed takeover bid for Japan Telecom.

Vodafone is to pay up to $2.64bn for the group. Vodafone already had a 45% stake in Japan Telecom.

Howard Gorges, South China brokerage , Hong Kong
"Uncertainty is the foe of all stock markets, particularly Hong Kong"
Richard Werner, Profit Research, Tokyo
"We have to be cautious"
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