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Asian bull run continues despite exports warning

business Updated: Mar 17, 2009 15:34 IST

AFP
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Asia's stock market rally accelerated on Tuesday, with Tokyo leaping 3.18 percent, but a sharp fall in exports from Singapore underlined the severe problems facing the region's economies.

Japan's Nikkei-225 led the charge with its third straight day of gains while Sydney grew 3.1 percent and Seoul rose 3.4 percent. Hong Kong was up 0.57 per cent in the afternoon session.

Share prices, especially in financials, continued to climb despite slight falls on Wall Street, where a late sell-off ended a four-day rebound based on cautious hopes of a recovery.

"Whether this is all a bounce in a bear market or a real move up from the bottom remains to be seen," said Bob Dickey, a technical analyst at RBC Wealth Management in New York.

"But with the market having gone through a five-month bottoming process that included three distinct bottoming moves, we are more inclined to believe that a major market low has been made."

World markets have plunged in recent months as the financial crisis hit companies and sparked a widespread economic downturn, raising fears of another Great Depression. The slump in demand from the United States and Europe has badly affected Asia's all-important exports, as Singapore's latest figures show.

Key exports fell 24 per cent in February year on year, following January's record 35 percent fall, reinforcing fears Singapore is primed for its worst-ever recession this year.

The tiny but affluent state's 10th straight monthly drop follows Japan's record 45.7 percent plunge in January and a slide of about 26 percent in last month's shipments from China. Flag-carrier Singapore Airlines (SIA) also reported a steep fall in passenger numbers and cargo shipments.

The airline, seen as a bellwether for the industry, said it carried 1.18 million passengers in February, down 20.2 percent from the same month last year.

"The prevailing global economic crisis has significantly dampened travel demand, translating to weaker uplifts," SIA said.

Airlines have been especially hard hit by the slowdown, with SIA reporting a 42.8 percent profit fall in the third quarter and Hong Kong's Cathay Pacific losing 1.1 billion dollars last year.

Other bad news continued to trickle in from around the region, with Hong Kong's Disneyland saying it has shelved expansion plans. The US-based entertainment giant said the decision would mean about 30 Hong Kong-based "Imagineers," who plan, design and engineer the company's theme parks, would lose their jobs.

A spokesman for the Hong Kong Commerce and Economic Development Bureau expressed "grave concern" at the decision and urged Disney to reconsider.

Anglo-Australian mining giant Rio Tinto predicted the global economy would remain difficult for two years, pinning hopes for an upturn on China. And the remote, US-administered Northern Mariana Islands lamented a 25 per cent drop in visitors from South Korea as its important tourism sector suffers.

South Korea, whose economy shrank 5.6 percent in the December quarter, is the second biggest tourist market for the Pacific archipelago, accounting for a third of visitors every year.

Meanwhile, one of Vietnam's top leaders said its formerly red-hot economy should start to bounce back from a period of slow growth by the end of this year.

"By the end of this 2009 and from the beginning of 2010, the situation will improve. The quality of the economy will be better by 2011," said Deputy Prime Minister Nguyen Sinh Hung.

The Economist Intelligence Unit earlier predicted Vietnam's economy would grow by just 0.3 percent this year, well below the government's target of 6.5 per cent.