Asia spooked even by German debt

Fears about the eurozone’s stability and tensions in Korea continue to drive markets down, leads the Financial Times. May 25th began with “steep falls in Asia and Europe equity markets and a dramatic drop at the start of the trading day in New York.” The financial daily explains that investors are dumping risky assets for the relative safety of US and German government debt. However, Asia is now looking warily at Europe. According to a Barclays Capital survey, “two-thirds of Japanese investors quietly fear that the latest €750bn aid package will have ‘not much’ impact on the eurozone’s woes.” Worse, both Japan and China are not just worried about Portuguese, Italian, Irish and Greek debt – “they seem pretty uneasy about German bonds too.” Key concerns are the sluggish nature of growth in Europe, the unpredictable nature of EU policymaking, but most alarmingly that “the functioning of the eurozone has had uncanny echoes of the collateralised debt obligation instruments that banks were flogging in the days of the credit boom.”