Experts urge global efforts against financial woes

by Wu Zhiqiang

NEW YORK, Oct. 6 (Chinese media) -- As another "black Monday" hit the financial markets ranging from Wall Street to European bourses and stock exchanges in the emerging economies, experts urge concerted global efforts against the c

"The current financial crisis is no longer something that can be handled by certain governments' bailout plans alone," said Li Shanquan, vice president and portfolio manager of Oppenheimer Fund. "It needs key players in the global financial market to work jointly."

"In line with the so-called 'financial virus' theory, the credit crunch, which has spread from the United States to Europe, will hit the Asia-Pacific and other countries and regions with close links to the U.S. in the financial market," Li said.

The Dow Jones Industrials shattered the 10,000 mark for the first time in four years Monday; the FTSE index witnessed its largest single-day drop since 1987; and the euro saw its exchange rate sliding to the lowest point since the birth of the common EU currency.

The financial crisis also gripped the emerging markets, with trading on the stock markets in Sao Paolo of Brazil and Moscow of Russia being forced to suspend twice due to two-digit index plunges.

Though the 700-billion-dollar bailout package was approved by the U.S. House of Representatives over the weekend, the implementation of the plan needs at least one month and the hemorrhage suffered by U.S. financial institutions is far graver than originally thought.

According to a latest report put out by JPMorgan Chase, the credit crunch would lead to a loss of 1.7 trillion dollars for the U.S. financial sector, far beyond the 945 billion dollars estimated earlier by the International Monetary Fund.

Some blame major European countries for failing to take timely steps in the wake of the financial crisis that hit Wall Street initially; the wait-and-see approach adopted by some countries has also fueled the spread of the crisis at a pace faster than expected.

Europe has been gripped by the financial crisis since last week.

"Against the backdrop of global economic integration, the interaction among international financial markets has become ever more closer, and the financial crisis on Wall Street has engendered systemic risks to the global financial system, making it almost impossible for any country to be immune from the meltdown," said Hong Pingfan, senior economic affairs officer at the United Nations Department of Economic and Social Affairs.

"When the financial crisis hit the United States and Europe, a large amount of capital would exit the emerging economies," said Hong, who heads the UN global economic monitoring unit.

"Due to their fragile economic structure and relatively greater dependence on foreign investment, India and Latin American countries may be the hardest hit," he said.

According to Bloomberg, the MSCI index for emerging markets dropped by 10.5 percent on Monday, the largest single-day slide since 1987.

"The global bourses saw their market cap shedding by 2.4 trillion dollars on Monday alone," said one senior banking analyst who only gave his last name, Chen. "It has been a crazy day. Confidence in the financial market has been shattered."

"The scariest thing today was not only the plunge in the European markets. Stock markets in emerging economies such as Brazil and Russia are also diving like crazy, bringing down the last shred of hope in the global market," he said.

"In history, when problems hit the emerging markets, it would take very long to recover," Chen said.

He expects the domino effect to hit Asian markets when they open Tuesday. "It appears nobody can be spared from this financial crisis."