Financial trouble is brewing in Asia again

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Trouble is brewing in Asia again

By Paul Erdman, CBS.MarketWatch.com Last Update: 1:35 PM ET Oct 31, 2000 NewsWatch Latest headlines

SAN FRANCISCO (CBS.MW) -- It was only a few years ago when Asia was plunged into a currency and financial crisis that threatened to undermine the entire global economy.

It even prompted Alan Greenspan to suggest at the time that the United States could hardly remain an island of stability in an increasingly turbulent world.

The Asian crisis passed, thanks to massive intervention by the IMF, supported by the US Treasury under the leadership of Robert Rubin. As a result, both the United States and Europe dodged that bullet.

But now trouble is again brewing in Asia.

The financial situation in Korea is getting worse by the day. The latest victim is Hyundai Engineering, a key unit of the Hyundai Group, Korea's second-biggest industrial group. It is now in default on $4.5 billion of bank debt.

Dong-Ah Construction Industrial Co., a rival of Hyundai, with $2.9 billion in debt, was refused new loans by creditors yesterday. Daewoo Motor Co., Korea's second biggest automaker, said it will shed a third of its Korean staff, sell assets and cut production as it desperately seeks to stem losses to avoid bankruptcy.

Japan chances of recovery are again fading. Its industrial production fell 3.4 percent in September from August. Unemployment unexpectedly moved up to 4.7 percent, extremely high by historic standards in that country. The yen has sunk to 109 to the dollar. The stock market is at a 20-month low.

The Philippines is also in crisis mode. Its peso has slumped 11 percent to a record low of 51.95 to the U.S. dollar following Philippine President Joseph Estrada being accused, three weeks ago, of receiving $6 million in bribes from operators of an illegal numbers game called ``jueteng.''

As capital once again starts to flee, mostly to the United States, all Asian currencies with the exception of the Hong Kong dollar and the Chinese RMB are sinking. Even Australia's currency is coming under serious fire.

And look at their stock markets. In dollar terms, year-to-date, Singapore has fallen 30 percent, Taiwan, is down 34 percent, South Korea is off 49 percent, and Indonesian stocks have, on average, lost 51 percent of their value.

These renewed rumblings of growing trouble on the other side of the Pacific Rim, combined with this week's news that consumer confidence here in the United States plunged to the lowest level in a year, could mean double trouble down the road in 2001.

Trouble is brewing in Asia again

By Paul Erdman, CBS.MarketWatch.com Last Update: 1:35 PM ET Oct 31, 2000 NewsWatch Latest headlines

SAN FRANCISCO (CBS.MW) -- It was only a few years ago when Asia was plunged into a currency and financial crisis that threatened to undermine the entire global economy.

-- Carl Jenkins (Somewherepress@aol.com), November 01, 2000


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