New Delhi: The stock markets in Asia collapsed drastically because the investors became cautious about the global economy. Stocks of the markets in Japan, China, South Korea, and Hong Kong exchanged low because traders reacted to conflicting information presented in the United States and Europe. The markets were also nervous due to a growing interest rates, poor growth prospects and the prospects of corporate earnings to be reported soon.
Analysts believe that investors are concerned over the performance of large multinational corporations in the near future. The increasing prices and expensive loans coupled with sluggish consumer spending are increasing the cost of many businesses. Due to this reason, investors are not taking risky bets, and are opting to keep their cash in the safe until there is more clarity.
The other cause of the fall is the high US dollar. As the dollar strengthens it strains the Asian currencies. This increases the cost of imports and the company profits are impacted. The excessive reliant countries on exports are also affected as the world is slowing down in demand.
The economic recovery that has taken place in China has not been as fast as anticipated as well. Issues in the property business and low consumer confidence have diminished hope. Since China is a dominant factor in the Asian economy, its slump has impacts on the economy regionally.
According to the market experts, the volatility might persist in the short run. Investors are keenly following the inflation statistics, central bank interest rate policies and profits posted by the leading international corporations. Any undesirable surprise may cause abrupt market changes.
