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business news
US expands auto
bailout, Japan
mulls fresh aid
SINGAPORE: The US government
expanded its bailout of the auto
industry, while Japan reportedly
considered a US$110 billion (RM385
billion) scheme to buy bad loans
from banks, the latest in a string of
government moves aimed at reducing
the damage from the worst downturn
since the 1930s.
Japanese stocks finished modestly
higher on their last trading day of 2008,
capping a grim year which saw the
Nikkei index plunge 42%, the biggest
loss in its 58-year history, as recession
fears battered global markets.
Analysts forecast more pain for
consumers and investors in 2009 as
bleak economic news continued to
flood in from around the world, but
said hopes of more government rescue
packages were helping to shore up
financial markets for now.
“Everyone’s pinning their hopes
on economic stimulus policies by the
United States and possibly China,” said
Tomomi Yamashita, a fund manager at
Shinkin Asset Management.
“But people aren’t watching things
like company results as closely as they
should be. We can’t say for sure that
the market’s bottomed out until we see
these next spring.”
The US government said late on
Monday it was pumping US$5 billion
(RM17.5 billion) into General Motors’
auto and mortgage financing arm
GMAC and lending an additional
US$1 billion (RM3.5 billion) to GM to
help it buy shares in GMAC, which is
considered crucial to GM’s survival.
The loan to GM would come on top
of assistance extended to the No. 1 US
automaker earlier this month.
The government agreed on Dec 19 to
rescue GM and Chrysler LLC with up
to US$17.4 billion (RM61.3 billion) in
loans to stave off a collapse that would
have cost hundreds of thousands of jobs
and dealt a severe blow to an economy
already in recession.
Japan stocks end worst-ever year
TOKYO: Japanese share prices yesterday
closed the year down 42.12% from 2007,
marking the worst-ever annual percentage
fall in Tokyo’s Nikkei index as the global
economic crisis hit hard.
Analysts predict the market could face
more pain in the new year as the world reels
from the worst financial downturn since the
Great Depression.
The Nikkei ended at 8,859.56 points as it
closed out the year with a half-day session,
6,448.22 points lower than 2007.
The stock market reopens on Jan 5.
The year’s fall was the worst in percent-
age terms since the index was established
in 1949.
“It was a year beyond our imagination,”
said Kazuhiro Takahashi, an analyst at Daiwa
Securities SMBC.
Global markets, already reeling from a
credit crunch, went haywire in September
when Wall Street titan Lehman Brothers
went belly up under a mountain of debt.
The Japanese market repeatedly posted
some of its biggest ever rises and falls. In
October, the Nikkei plunged to a 26-year
low.
“Since October, we have been exposed
to harsh winds that we have rarely expe-
rienced,” Tokyo Stock Exchange president
Atsushi Saito told the ceremony to close the
year’s trading.
theSun | WEDNESDAY DECEMBER 31 2008
Japan’s government may also be
weighing fresh moves to keep the
country from sliding deeper into
recession. The Sankei Shimbun reported
yesterday the government and central
bank are hoping to launch a US$110
billion scheme by the end of March to
buy bad loans and other financial assets
from banks using public money to ease
the corporate credit crunch.
The move would theoretically
free up banks to lend more money to
companies which are struggling to raise
funds through more traditional means
such as selling bonds or new shares.
But banks worldwide are growing
more reluctant to lend as they brace for
a slew of bad loans as economies sour.
Analysts also doubted whether any
such plan would be as effective today
as in the late 1990s, when Japanese
banks were saddled with a much
bigger pile of bad loans.
South Korea pledged yesterday to
ramp up support for its banks next year
as more grim economic news flooded in.
South Korea’s industrial output fell
10.7% last month – the biggest monthly
decline since 1987, as domestic and
export demand slumped. Some analysts
say Asia’s fourth-largest economy will
shrink next year for the first time in 11
years, putting pressure on its central
bank to cut interest rates further.
In New Zealand, data showed
household borrowing fell for the
first time in 17 years last month as S’pore, Incheon
consumers cut spending.
Reports on Monday showed Europe
was also slipping into a deeper funk.
scrap plans for
The French economy stalled, morale at
Italian businesses sank to its lowest level
budget airline
since at least 1991 and the Chartered SINGAPORE: Tiger Airways said in a
Institute of Personnel Development statement yesterday a plan to establish a
forecast as many as 600,000 people could budget carrier with South Korea’s Incheon
lose their jobs in Britain next year. city has been scrapped due to the wors-
Many forecasters believe the ening global economic situation.
downturn will continue well into Regulatory problems in South Korea
mid-2009, with more layoffs and also contributed to the decision to aban-
bankruptcies to come. – Reuters don the project for a new low-fare airline
operating from Incheon’s international
airport, the Singapore-based Tiger said.
“The recent global economic situation
and continued regulatory uncertainty in
“In the long history of mankind, there have Korea have meant that both parties have
been many harsh economic slumps but they concluded that the climate is not condu-
have been overcome. We want to make the cive to the successful launch of a new
next year a year in which we will move to- airline at this time,” the statement said.
wards the future in a constructive manner.” Tiger chief executive Tony Davis said
This year, shares were hardest hit in the
Free he was “clearly disappointed that we will
auto sector with all of Japan’s carmakers concert to cease preparations for the establishment
drastically cutting their earnings forecasts welcome of Incheon Tiger Airways”.
due to falling demand in the United States Incheon city, west of Seoul and the
and Europe as well as a soaring yen.
2009 site of the country’s main international
Shares in Toyota Motor Corp – a year ago pg 25 airport, originally planned to apply for a
a pillar of the Japanese economy – lost half licence in September and launch the joint
of their value in the course of the year. venture by the end of this year.
The falls were even more dramatic for The city and its affiliates would have
some of their competitors such as Nissan owned 51% of the joint venture while
Motor Co and Mazda Motor Corp as well as Tiger would have held 49%.
for some major Japanese exporters. The project sparked strong protests
Shares in Sony Corp tumbled 69% in this from four South Korean budget carriers,
year, while top bank Mitsubishi UFJ Financial which claimed the venture would be
Group was down 47.56%. effectively controlled by Tiger since the
While 2008 was the worst-ever year in city lacks airline experience.
percentage terms, the Nikkei suffered a South Korean domestic aviation law
bigger fall in points in 1990 with the end of bans Korean airlines from being more
Japan’s bubble economy, shedding 15,067.16 than 50% foreign-controlled, and the local
points or 38.71% of its value. budget carriers accused Tiger of attempt-
The market at least ended 2008 on a ing to use “the mask of a Korean carrier”.
positive note, rising 112.39 points or 1.28%, Tiger Aviation said last year it planned
in yesterday’s abbreviated session. to start the joint venture with five Airbus
The broader Topix index of all first-sec- A320 planes servicing domestic routes
tion shares ended the year down 41.77% as well as destinations in Japan, China,
at 859.24. For the final session of 2008, the Russia and Mongolia. – AFP
index rose 4.47 points or 0.52%. – AFP