ASEAN KEY DESTINATIONS
Central banks move to calm nervous markets
South Korea's finance ministry said it was ready to supply emergency funds if credit dried up due to the turmoil in US subprime mortgages. The country's banks and insurers have invested $850 million in the US subprime mortgage loan sector, it added.
Malaysia's central bank said it was prepared to step in with funds to keep commercial banks lending to one another at normal rates, but added it had no specific plans to do so.
"We're seeing more of the same. The central banks are trying to prop up confidence more than anything else, as markets are awaiting new information," said Robert Prior-Wandesforde, an economist at HSBC in Singapore.
Central bankers from Asia to the United States had managed to restore an uneasy calm to financial markets by injecting billions of dollars into money markets that had almost seized up.
The Asia-Pacific region is still awash in cash, with gross capital inflows into East Asia totaling $269 billion in 2006, the Asian Development Bank said.
Asia's stock markets were flat to higher on August 13, with Japan's Nikkei 225 index up 0.2%, and the yen was about unchanged.
"There's no evidence of subprime-related problems in Asia yet. As far as stock markets are concerned, valuations in Europe and the United States are at 15-year lows, definitely not stretched, while the fundamentals are sound, particularly in Asia," HSBC's Prior-Wandesforde said.
Investors' main worries are undisclosed losses resulting from toxic debt that could trigger the collapse of banks and funds. It is this concern that has prompted banks to hoard cash rather than lend it to each other in short-term trades as usual, making interbank lending expensive. Reuters