Japan insurers seek merger as crisis takes toll
Tuesday, 30 December 2008
SINGAPORE, Dec 29 (Reuters): Crumbling home and auto sales pushed three Japanese insurers into merger talks and Koreans plan to cut spending on children's education, signs the global economic slump is reshaping business and lifestyles around the world.
Economic reports this week are expected to produce more bleak reading, showing global manufacturers entrenched in recession as they cut production to avoid being stuck with huge, expensive inventories in sinking economies.
Consumers, investors, central bankers and politicians are hoping to see some signs of recovery next year from the worst downturn since the 1930s as governments pump over one trillion dollars into their ailing economies.
This year will produce one of the biggest ever stock market falls. The US S&P 500 benchmark is down 41 per cent with only three trading days left in 2008. Its biggest yearly drop was in 1931 during the Great Depression when it fell 47.1 per cent.
The Dow Jones Wilshire 5000 index, the broadest measure of US equity performance, shows a record $7.3 trillion of stock market value has been wiped out this year as the fast-spreading global financial crisis crippled the ability of many companies to raise funds and pushed economies into recession.
The fallout has hit all sectors from banks to autos to commodities and resources. Unemployment has climbed as house prices plummet and cash-strapped consumers curtail spending, heaping more pressure on companies struggling to survive the downturn.
Three big Japanese insurance companies were the latest firms considering a merger to tackle a downturn that has hit demand for car and fire insurance in the world's second-largest economy.
Shares of Mitsui Sumitomo Insurance Group Holdings Inc, Aioi Insurance Co and Nissay Dowa General Insurance Co surged Monday on hopes that a merger would increase profits and reduce competition.
The three aim to reach a basic agreement by March 2009, a company source said, which would produce the country's largest non-life insurer.
A surging yen also provided another motivation for a merger, analysts said, because it has eroded the value of the insurers' foreign-currency assets.
Yen strength has prompted official concern, underscored Monday by Finance Minister Shoichi Nakagawa, who told the Financial Times that he was watching volatility in the foreign exchange market with alarm.
The yen has surged more than 18 per cent against the US dollar this year, slamming Japanese exporters like Toyota and Sony and triggering speculation the government may intervene to halt the currency's rally.
"Every day I am looking at the market developments with a sense of alarm and urgency," the paper quoted Nakagawa as saying in reference to yen volatility in an interview.
Economic reports this week are expected to produce more bleak reading, showing global manufacturers entrenched in recession as they cut production to avoid being stuck with huge, expensive inventories in sinking economies.
Consumers, investors, central bankers and politicians are hoping to see some signs of recovery next year from the worst downturn since the 1930s as governments pump over one trillion dollars into their ailing economies.
This year will produce one of the biggest ever stock market falls. The US S&P 500 benchmark is down 41 per cent with only three trading days left in 2008. Its biggest yearly drop was in 1931 during the Great Depression when it fell 47.1 per cent.
The Dow Jones Wilshire 5000 index, the broadest measure of US equity performance, shows a record $7.3 trillion of stock market value has been wiped out this year as the fast-spreading global financial crisis crippled the ability of many companies to raise funds and pushed economies into recession.
The fallout has hit all sectors from banks to autos to commodities and resources. Unemployment has climbed as house prices plummet and cash-strapped consumers curtail spending, heaping more pressure on companies struggling to survive the downturn.
Three big Japanese insurance companies were the latest firms considering a merger to tackle a downturn that has hit demand for car and fire insurance in the world's second-largest economy.
Shares of Mitsui Sumitomo Insurance Group Holdings Inc, Aioi Insurance Co and Nissay Dowa General Insurance Co surged Monday on hopes that a merger would increase profits and reduce competition.
The three aim to reach a basic agreement by March 2009, a company source said, which would produce the country's largest non-life insurer.
A surging yen also provided another motivation for a merger, analysts said, because it has eroded the value of the insurers' foreign-currency assets.
Yen strength has prompted official concern, underscored Monday by Finance Minister Shoichi Nakagawa, who told the Financial Times that he was watching volatility in the foreign exchange market with alarm.
The yen has surged more than 18 per cent against the US dollar this year, slamming Japanese exporters like Toyota and Sony and triggering speculation the government may intervene to halt the currency's rally.
"Every day I am looking at the market developments with a sense of alarm and urgency," the paper quoted Nakagawa as saying in reference to yen volatility in an interview.