World equity markets continued their slide in November as risk aversion coupled with weaker economic data continued to push investors away from equities. Due to the adverse shift in operating conditions, not only is the outlook for corporate earnings looking poor, but the limited availability of credit is making solvency a real concern for less favourably positioned businesses.
Asian equity markets fell in November on concerns about the health of the financial sector as well as concerns of a deeper global economic slowdown and mounting difficulties in the US auto industry. Governments across the world including Asia slashed growth forecasts for 2009, in view of softer demand for exports, higher unemployment and rising cost of funding. In Asia, governments have introduced fiscal stimulus packages and easy monetary policies to boost consumption and liquidity. Asian markets managed to recover some losses after the US government announced plans to bail out Citigroup and introduced a US$800b package to revive mortgage and consumer credit markets. Overall, the Asian equity market outperformed the global equity market.
The TOPIX continued to fall in November, extending the current decline to six months. The TOPIX strengthened temporarily to a month’s high of 966.91 points on 4 November on news of interest rate cuts in the US and Japan, and in reaction to Barack Obama’s victory in the US presidential election. However, negative earnings announcements (e.g. a 1 trillion yen downward earnings revision by Toyota Motors), poor economic data from Japan and overseas, and appreciation of the yen against the US dollar and the Euro, led to renewed market weakness.
