For most of the past month sentiment in the financial
There was further evidence that the global economic
recovery was still on track, and short-term interest
But towards month-end the mood changed after the
decision to downgrade Greek debt to junk status, and
to reduce the credit ratings of both Portugal and Spain.
There was a fear that the contagion would spread still
further, and that the bond market pressures resulting
from the massive fiscal deficits around the world would
have serious financial consequences.
There was always the risk that some of the measures
that were introduced to counter the recession might
have adverse consequences, and this is now proving
Shaw Capital Management Korea: Major Equity Markets
After moving ahead for most of the month, most of the
major equity markets are ending the period unchanged
or slightly higher, and there have been sharp falls in
Wall Street has been the exception, and is ending
higher, encouraged by some favourable corporate
But markets in Europe, including the UK, are lower,
and there have been falls in the Chinese market, and
other Asian markets, after the measures by the
authorities to reduce the risk of over-heating in the
However views about longer-term prospect are still
fairly positive, and the markets seem to be simply
pausing until some of the uncertainties have been
Bond markets; have produced a mixed performance,
with the major markets holdings fairly steady, despite
the worsening background situation, but with the minor
markets, especially in Europe, suffering very sharp
falls, and yield spreads between the stronger and weaker
The threat of sovereign debt defaults has increased
and urgent action is needed, especially in Europe, if
they are to be avoided.
However there are also warnings that similar conditions
could develop in the UK and in Japan if there are no
early moves to reduce the level of fiscal deficits.
It is still expected that an aid package will be agreed
to avoid a default on Greek debt; but this may only
Movements amongst the major currencies have been
relatively small over the past month.
However the weakness of the euro has enabled both
the dollar and sterling to improve as investors have
rushed to reduce their exposure to the European
There is a fear that the debt problems affecting Greece
and other countries in the euro-zone will make it
extremely difficult to restore the credibility of the euro,
and that it might make it necessary for some countries
to leave the single currency system, at least on a
There have been no changes in short-term interest
rates in the major financial centres over the month.
The Bank of Canada though has indicated that it is
considering pushing rates higher, and this has
encouraged speculation that other central banks may
Moved higher over the past month as sentiment in the
financial markets improved.
markets continued to improve.
There was further evidence that the global economic
recovery was still on track, and short-term interest
rates remained very low.
But towards month-end the mood changed after the
decision to downgrade Greek debt to junk status, and
to reduce the credit ratings of both Portugal and Spain.
There was a fear that the contagion would spread still
further, and that the bond market pressures resulting
from the massive fiscal deficits around the world would
have serious financial consequences.
There was always the risk that some of the measures
that were introduced to counter the recession might
have adverse consequences, and this is now proving
to be the case.
Shaw Capital Management Korea: Major Equity Markets
Related Coverage
- Taiwan's Economy: By Shaw Capital Management Korea
- Foreign Exchange Markets 2010: Shaw Capital Management
- Shaw Capital Management: South Korea's Economy
- China's Economy: By Shaw Capital Management Korea
With gross domestic product clocking 10.2% growth from a year ago in the fourth quarter, and 4.2% from the previous quarter, Taiwan returned to pre-financial crisis growth levels. In spite of the strong recovery in the second half of the year.
The main feature of the foreign exchange markets over the past month has been the further sharp fall in the euro. There has been no real change in the background economic situation in the euro-zone; but there has been a serious deterioration in the financial background as doubts have increased about the ability of Greece and some other periphery countries to cope with their massive fiscal deficits and service their sovereign debts.
South Korea's output is continuing to accelerate, and the government needs to exit from its accommodative economic policies earlier than anticipated. The HSBC Korea's purchasing managers' index (PMI) rose from 55.6 in January to 58.2 in February - the highest since December 2007.
China's Economy: by Shaw Capital Management Korea - China will continue fiscal stimulus spending and its current monetary policies this year as the country has, in the opinion of the Chinese Communist Party, not fully recovered from the economic downturn.
major equity markets are ending the period unchanged
or slightly higher, and there have been sharp falls in
many of the minor markets.
Wall Street has been the exception, and is ending
higher, encouraged by some favourable corporate
results.
But markets in Europe, including the UK, are lower,
and there have been falls in the Chinese market, and
other Asian markets, after the measures by the
authorities to reduce the risk of over-heating in the
Chinese economy.
However views about longer-term prospect are still
fairly positive, and the markets seem to be simply
pausing until some of the uncertainties have been
resolved.
Bond markets; have produced a mixed performance,
with the major markets holdings fairly steady, despite
the worsening background situation, but with the minor
markets, especially in Europe, suffering very sharp
falls, and yield spreads between the stronger and weaker
markets opening up to record levels.
The threat of sovereign debt defaults has increased
and urgent action is needed, especially in Europe, if
they are to be avoided.
However there are also warnings that similar conditions
could develop in the UK and in Japan if there are no
early moves to reduce the level of fiscal deficits.
It is still expected that an aid package will be agreed
to avoid a default on Greek debt; but this may only
provide temporary relief.
Shaw Capital Management Korea: Currencies
Movements amongst the major currencies have been
relatively small over the past month.
However the weakness of the euro has enabled both
the dollar and sterling to improve as investors have
rushed to reduce their exposure to the European
currency.
There is a fear that the debt problems affecting Greece
and other countries in the euro-zone will make it
extremely difficult to restore the credibility of the euro,
and that it might make it necessary for some countries
to leave the single currency system, at least on a
temporary basis.
Shaw Capital Management Korea: Short-Term Interest Rates
There have been no changes in short-term interest
rates in the major financial centres over the month.
The Bank of Canada though has indicated that it is
considering pushing rates higher, and this has
encouraged speculation that other central banks may
be planning similar moves.
Shaw Capital Management Korea: Commodity Markets
Moved higher over the past month as sentiment in the
financial markets improved.
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