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Thursday, December 11, 1997 Published at 16:46 GMT



Business

Far East shares turmoil
image: [ Traders in Hong Kong have been protesting at falls ]
Traders in Hong Kong have been protesting at falls

Share markets across the Far East have again recorded sharp falls, from Tokyo to Singapore.

The South Korean won fell to a new low and trading was suspended just four minutes after it opened. The Japanese Nikkei index was down more 2.5% amid uncertainty over the government's plans to stabilise the country's shaky financial system.

The fall in Thailand was almost 5%, while in Hong Kong shares lost nearly 6%.

The economic turmoil in the Far East has led to worries plans to restore economic stability to the region may not go far enough.


[ image: Losses are adding up in Hong Kong]
Losses are adding up in Hong Kong
The won dropped by 10%, its permissible daily limit, to a new record low of 1,719.8 against the dollar. Stock prices also opened sharply lower, falling 4.5% to 381.87.

Fears are mounting that the $57 billion rescue package for South Korea devised by the IMF, and its strict economic conditions, may lead to more companies going into bankruptcy.

Of particular concern are the requirements for cuts in Government spending, higher interest rates, and reduced growth.

The South Korean president, Kim Young-sam has again apologised for his country's crisis. He has promised to honour all the conditions set for the economy by the International Monetary Fund.

"All responsibility for the current situation lies on me," he said. He later sacked his two top economic advisors.

At least eight conglomerates with more than 100 subsidiary companies have collapsed in the last year, with huge debts. The IMF's conditions have seen 14 finance companies suspended.

But at the same time there is a hardening mood in Western countries that the IMF-led rescues do not work because governments do not spell out what they are required to do and implement the programmes too slowly.

Some economists are now saying that the rescues do not work, arguing the best way to force discipline on economies is for there to be no bail-outs. They argue outside help only encourages "bad behaviour".

Another view is that the rescues depress economies where prospects are already deteriorating.

The crisis is unleashing new worries in Tokyo, which have been fuelled by uncertainties over the rescue package for the fragile Japanese banking system.


 





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