Asia stocks fall as G20 gets cool response
Singapore, September 23, 2011
Asian stocks slid to a 16-month low and emerging market currencies fell on Friday amid fears that the developed world is stumbling back into recession, while a pledge from the G20 to preserve financial stability left investors largely unimpressed.
Equity markets pulled back from the depths of their slump and profit-taking lifted the euro after a statement committed the Group of 20 major economies to "take all necessary actions" and said central banks stood ready to provide liquidity.
But market players said any market bounce would likely be short-lived.
"There is nothing new, nothing substantial where we can grasp and say this is good, now we can put on some risk again. I don't think it changes the bigger picture," said Jesper Bargmann, Asia head of G11 spot FX for RBS in Singapore.
Alarm at the US Federal Reserve's dire outlook for the world's biggest economy at its two-day policy meeting this week pushed world stocks to 13-month lows as investors shed risky assets from portfolios and scurried to safer havens.
MSCI's broadest index of Asia Pacific shares outside Japan was down 2.2 percent, having earlier fallen as much as 3 percent to its lowest level since May 2010.
European stocks were expected to bounce after falls of nearly 5 percent on Thursday, with financial spreadbetter calling the major indexes in London, Paris and Frankfurt up 0.8-1.5 percent. Tokyo markets were closed for a holiday.
The G20 statement came as finance ministers and central bankers met in Washington, under pressure from investors to show action in the face of rising stresses in the financial system.
Several European banks have seen their share prices tumble and their cost of funding rise as investors worried about their exposure to debt issued by Greece and other debt-heavy euro zone countries.
Global stocks as measured by MSCI's All-Country World index are now in bear market territory - often defined as a fall of 20 percent or more - having fallen 22.9 percent from their 2011 high in May.
Asian stocks have broadly unperformed since a global rout in early August, with MSCI's regional ex-Japan index 27.5 per cent below its year high, reached in April.-Reuters