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The most turbulent time of the global financial market has ended, with the funding cost in the commercial market remaining stable and the main stock indexes going up in the past two weeks, Hong Kong economist Law Ka Chung has said.
Ever since the collapse of Lehman Brothers in last September, governments and monetary authorities around the world have adopted policies to battle the liquidity squeeze and ease the tension of the financial system. In the wake of those measures, the major stock indexes stopped plunging and began to rebound in the past two weeks, with the financial shares re-attracting funds, said LawKa Chung, a Hong Kong-based chief economist and strategist at the Bank of Communications, in a recent interview with Xinhua.
"The most turbulent time of the global financial market is over. Governments of major economies have found effective ways to lower the interest rate of commercial markets. There shall not be any unnecessary fails of big institutions like the collapse of Lehman Brothers as long as the funding cost remains low," Law said.
However, although the financial market is more stable than in the second half of last year, some analysts said the problem had passed on to the real economy and spread among countries. What the globe faces now is a worsening economic recession.
"By the end of this year, the situation might turn out better, which, however, doesn't mean the economy is really bottoming out, "Law said, stressing that there might be several 'bottoms' of the current crisis and the world hasn't experienced one yet.
Law saw some parallels between the economic situation right now and the case of Japan in the 1990s or the situation of America in the 1950-60s, as the two countries both experienced more than one bottom in the economic downturn right then. However, he believes, once human beings achieve scientific and technological breakthroughs on productivity, the world economy will be reignited. "Each time we make great economic progress in history, the primary reason lies in the productivity."
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