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Alternative Market Briefing

GFIA: Weak currency pulls down Japan and Korea, recession accelerates in LatAm

Wednesday, April 01, 2009

From Komfie Manalo, Opalesque Asia :

The specter of global economic contraction continued to weigh down on the markets, with developed Asia, particularly Japan and Korea, faring much worse than the rest of the region, according to GFIA's March report entitled “Research Insights.”

The MSCI Asia Pacific ex Japan saw a loss of 6.2% in February-09, while the MSCI Asia Pacific lost 9.5%, the Singapore-based consulting firm said.

Currency depreciation the main loss driver in Japan and Korea While the Japanese market displayed signs of a possible bear rally in the early days of February, it was not sustained, GFIA said. The Japanese yen declined by 9.0% which was the root cause of the severe drop in the Japanese indices. The shocking fall in exports in January and the Q4 y-o-y GDP contraction sent investors scuttling to sell their yen. The Nikkei 225 ended the month down 13.2%, and the smaller cap Mothers index ended the month down 19.7%.

Korea was among the worst performers as the Kospi fell 17.4 %, largely due to a currency depreciation of 10.8%. Vietnam shares fell 18.4%, the report said.

India's BSE Sensex ended the month down 8.8%, with just under half of the losses coming from currency weakness.

The additional stimulus plans introduced by the government at the beginning of the month, coupled with reports of strong loan growth, were a boost for the Greater China markets. The Shanghai A......................

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