» 10/02/2008 12:21 ASIA US Senate vote unconvincing for Asian markets Stock exchanges are down. Uncertainty persists over vote in US House of Representatives. Economists view plan as trivial compared to the enormity of the crisis, a temporary panacea that will not solve the underlying problems.
Hong Kong (AsiaNews/Agencies) – Asia stock exchanges are still in negative territory despite US Senate approval of the US government financial rescue plan last night. Japan's main Nikkei index ended the day trading down 1.9 per cent, whilst Hong Kong's Hang Seng slipped 1.4 percent. Australian shares also declined, losing 0.9 per cent on Thursday. In Singapore shares ended lower by 0.9 per cent and in Seoul they fell by 1.4 per cent.
Despite Senate approval the US financial rescue plan faces hurdles in the lower house which rejected a first version of the proposal last Monday.
The plan was slightly changed with the addition of tax breaks for the middle class and small and medium size business as well as a provision to increase bank deposit insurance to US$250,000 from US$100,000.
The core of the plan—which would see the government buy toxic debt from financial institutions to get banks lending again—is unchanged.
Public opinion in the United States remains hostile to a proposal that would save Wall Street and have US taxpayers foot the bill. What is more for hundreds of economists the plan is only a short-term solution, useless to tackled the financial bubble.
“There is little room for optimism. Even if the bill is passed, worries remain over the global economic outlook so financial markets are unlikely to stabilise,” said Masamichi Adachi, a senior economist at JPMorgan Securities in Japan.
“It's a completely different world now. All the things US authorities are doing now are simply aimed at preventing a global meltdown. They might trigger a short rally in markets but won't offer a fundamental solution,” he said.
