MW: Asia fleshes out support measures, considers more
By Chris Oliver, MarketWatch
HONG KONG (MarketWatch) -- Nations across Asia provided fresh details Monday on rescue plans designed to help shore up financial markets, during a day that saw equity markets across the region respond favorably to the coordinated effort by the Group of Seven nations over the weekend.
Japanese Finance Minister Shoichi Nakagawa said late Monday he would consider a plan that will guarantee all bank deposits, according to Japanese media reports.
The plan would amend the government-backed Deposit Insurance Corporation's scheme, which currently guarantees up to 10 million yen ($100,000) for each deposit, according to Jiji Press. Tokyo temporarily lifted the upper limit on deposit insurance from 1996 to 2005 in an effort to boost confidence in the commercial banking system.
Earlier in the day, the Japanese government and the Bank of Japan were reportedly weighing a plan to temporarily halt sales of their 2-trillion yen shareholdings in Japanese banks to alleviate the pressure on stock prices, according the Nikkei newspaper, which didn't say where it got the information.
The report did not indicate how long the share-sale suspension would be in effect. The government and the BOJ accumulated vast holdings in domestic banks between 2002 and 2006 as part of efforts to recapitalize the financial system. The agencies began selling large numbers of these shares in fiscal 2006 and had targeted a 10-year period for complete divestment.
As of March 31, outstanding shareholdings for the government amounted to 500 billion yen while the BOJ held about 1.4 trillion yen. That's down from a peak of 1.6 trillion yen ($16.1 billion) and 2 trillion yen held by the government-backed Banks Shareholdings Purchase Corp. and the BOJ, respectively, the report said.
Japanese financial markets were closed for a public holiday Monday.
Elsewhere in the region, China's securities regulator said it suspended approvals for initial public offerings from banks. The measure was unveiled by China's Securities Regulatory Commission to bankers attending an internal training session Monday in Shanghai, according to newswire reports. The regulator said it wouldn't review new listing applications at this time and that the Ministry of Finance was working on a policy regulating future IPOs in the sector, Dow Jones Newswires reported.
China will also move to stabilize prices for building materials and necessities during reconstruction in the areas affected by the massive earthquake in May.
China's economic planning agency reportedly said Monday that local governments had been advised to maintain fair prices for utilities and transport in earthquake-hit regions. Subsidies for water and electricity charges, where needed, would also be made available, according to a Dow Jones Newswire report which cited an agency statement.
Food prices are also to be kept stable under the government edict.
Trade data released Monday showed China's trade surplus for September surged to a record $29.3 billion. The surplus was driven by a surprise 21.5% rise in exports from a year earlier, while imports grew 21.3% on year, in line with economists' forecasts.
Elsewhere, Australia's government said its backing for wholesale funding and deposits will be restricted to securities with terms of five years or less, according to a release published by the Department of Treasury.
The guarantee will apply to senior unsecured debt issuance in all major currencies including the Australian dollar, New Zealand dollar, euro, U.S. dollar, sterling, yen and Hong Kong dollar, the Treasury said.
The guarantee will be limited to securities issued by Australian depository institutions, as these are subject to oversight by Australian regulators.
The guarantee is part of the three-point plan outlined by Australian Prime Minister Kevin Rudd Sunday. The plan also included a blanket guarantee on bank deposits and a doubling of the government's pledge to purchase residential mortgage-backed securities to A$8 billion ($5.4 billion)
Separately, the Reserve Bank of Australia injected an additional net A$1.8 billion into the financial system Monday to help bring down interbank funding costs.
