Asian Stocks Extend Global Rally as Recession Fears Ease for Now

A pedestrian walks past a stock indicator displaying the Nikkei 225 of the Tokyo Stock Exchange (C, top) and other world stock markets in Tokyo on 16 August 2021. AFP
A pedestrian walks past a stock indicator displaying the Nikkei 225 of the Tokyo Stock Exchange (C, top) and other world stock markets in Tokyo on 16 August 2021. AFP
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Asian Stocks Extend Global Rally as Recession Fears Ease for Now

A pedestrian walks past a stock indicator displaying the Nikkei 225 of the Tokyo Stock Exchange (C, top) and other world stock markets in Tokyo on 16 August 2021. AFP
A pedestrian walks past a stock indicator displaying the Nikkei 225 of the Tokyo Stock Exchange (C, top) and other world stock markets in Tokyo on 16 August 2021. AFP

Asian markets rose Friday on easing recession fears, while there were growing hopes that Joe Biden will remove some Trump-era tariffs from Chinese goods.

Buying was also boosted by reports that Beijing was considering a huge stimulus shot to the struggling economy by allowing local governments to raise billions of dollars through bond issuance for infrastructure projects, AFP said.

However, surging inflation, rising interest rates and a fresh flare-up of Covid infections in Shanghai continued to keep investor sentiment grounded.

Traders were handed a strong lead from Wall Street, where all three main indexes climbed for a fourth straight day, helped by two top Federal Reserve officials who said the economy could withstand sharper rate hikes and maintain growth.

There has been growing talk that the fast pace of monetary tightening by the bank will tip the world's top economy into recession.

But Christopher Waller, a member of the board of governors, said worries were overblown and that a strong jobs market would provide a buffer, adding that rates needed to go up sharply and quickly.

St Louis Fed president James Bullard also said there was "a good chance of a soft landing".

And Brian Belski, at BMO Capital Markets, agreed that fears of a recession had gone too far.

"I'm calling this period right now a recession obsession," he told Bloomberg Television. "Institutional investors are not positioned for any kind of upside move. That’s why you are seeing these sharp moves on a day like (Thursday). We remain positive and think people are way too negative."

With the mood more upbeat, Asian equities advanced with Hong Kong, Shanghai, Tokyo, Sydney, Seoul, Singapore, Wellington, Taipei, Manila and Jakarta all in the green.

- Jobs market weakness -The Fed's policy plans will be in focus later Friday when US employment data is released, with a strong reading providing the central bank with evidence to stick to its hawkish line.

But Matt Simpson at StoneX Financial said there were indications the jobs market could be showing signs of weakness.

The report "is unlikely to deter the Fed from a 75 basis points hike this month. But when the precious non-farm payroll numbers begin to crumble, so does the Fed’s argument that the US economy is robust", he said.

"And we’re seeing early signs of that across multiple employment metrics."

"When we do see unemployment begin to rise and headline employment growth lose momentum it will be hard for the Fed to ignore," he added.

"And that could provide a reason for the Fed to at least pause their hiking cycle, because a crumbling jobs market is great for deflation. So I’d expect market fireworks if and when (non-farm payroll numbers) begins to disappoint."

Biden is also reported to be holding a meeting later Friday with top advisers to discuss whether or not to lift some of the Trump-era tariffs imposed on around $300 billion of Chinese imports.

While he is also said to be considering another probe into other facets of Beijing's trade policy, analysts said the removal of the levies could boost China's export growth to the United States by about 20 percent.

The move could also help ease upward pressure on US inflation, which is running at a four-decade high.

Sterling extended Thursday's rally that came after Boris Johnson resigned as leader of the ruling Conservatives, paving the way for a new prime minister and bringing an end to weeks of political uncertainty in the United Kingdom.

The euro remained stuck at a 20-year low against the greenback after minutes from the European Central Bank's most recent meeting indicated that, unlike the Fed, it was happy to hike rates at a slower pace despite surging inflation.

- Key figures at around 0245 GMT -
Tokyo - Nikkei 225: UP 1.4 percent at 26,869.82 (break)

Hong Kong - Hang Seng Index: UP 0.9 percent at 21,841.61

Shanghai - Composite: UP 0.5 percent at 3,381.11

Pound/dollar: UP at $1.2041 from $1.2024 Thursday

Euro/dollar: UP at $1.0173 from $1.0162

Euro/pound: DOWN at 84.46 pence from 84.49 pence

Dollar/yen: DOWN at 135.72 yen from 136.01 yen

West Texas Intermediate: DOWN 0.3 percent at $102.43 per barrel

Brent North Sea crude: DOWN 0.2 percent at $104.49 per barrel

New York - Dow: UP 1.1 percent at 31,384.55 (close)

London - FTSE 100: UP 1.1 percent at 7,189.08 (close)



IMF and Arab Monetary Fund Sign MoU to Enhance Cooperation

The MoU was signed by IMF Managing Director Dr. Kristalina Georgieva and AMF Director General Dr. Fahad Alturki - SPA
The MoU was signed by IMF Managing Director Dr. Kristalina Georgieva and AMF Director General Dr. Fahad Alturki - SPA
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IMF and Arab Monetary Fund Sign MoU to Enhance Cooperation

The MoU was signed by IMF Managing Director Dr. Kristalina Georgieva and AMF Director General Dr. Fahad Alturki - SPA
The MoU was signed by IMF Managing Director Dr. Kristalina Georgieva and AMF Director General Dr. Fahad Alturki - SPA

The International Monetary Fund (IMF) and the Arab Monetary Fund (AMF) signed a memorandum of understanding (MoU) on the sidelines of the AlUla Conference on Emerging Market Economies (EME) to enhance cooperation between the two institutions.

The MoU was signed by IMF Managing Director Dr. Kristalina Georgieva and AMF Director General Dr. Fahad Alturki, SPA reported.

The agreement aims to strengthen coordination in economic and financial policy areas, including surveillance and lending activities, data and analytical exchange, capacity building, and the provision of technical assistance, in support of regional financial and economic stability.

Both sides affirmed that the MoU represents an important step toward deepening their strategic partnership and strengthening the regional financial safety net, serving member countries and enhancing their ability to address economic challenges.


Saudi Chambers Federation Announces First Saudi-Kuwaiti Business Council

File photo of the Saudi flag/AAWSAT
File photo of the Saudi flag/AAWSAT
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Saudi Chambers Federation Announces First Saudi-Kuwaiti Business Council

File photo of the Saudi flag/AAWSAT
File photo of the Saudi flag/AAWSAT

The Federation of Saudi Chambers announced the formation of the first joint Saudi-Kuwaiti Business Council for its inaugural term (1447–1451 AH) and the election of Salman bin Hassan Al-Oqayel as its chairman.

Al-Oqayel said the council’s formation marks a pivotal milestone in economic relations between Saudi Arabia and Kuwait, reflecting a practical approach to enabling the business sectors in both countries to capitalize on promising investment opportunities and strengthen bilateral trade and investment partnerships, SPA reported.

He noted that trade between Saudi Arabia and Kuwait reached approximately SAR9.5 billion by the end of November 2025, including SAR8 billion in Saudi exports and SAR1.5 billion in Kuwaiti imports.


Leading Harvard Trade Economist Says Saudi Arabia Holds Key to Success in Fragmented Global Economy

Professor Pol Antràs speaks during a panel discussion at the AlUla Conference for Emerging Market Economies (Asharq Al-Awsat).
Professor Pol Antràs speaks during a panel discussion at the AlUla Conference for Emerging Market Economies (Asharq Al-Awsat).
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Leading Harvard Trade Economist Says Saudi Arabia Holds Key to Success in Fragmented Global Economy

Professor Pol Antràs speaks during a panel discussion at the AlUla Conference for Emerging Market Economies (Asharq Al-Awsat).
Professor Pol Antràs speaks during a panel discussion at the AlUla Conference for Emerging Market Economies (Asharq Al-Awsat).

Harvard University economics professor Pol Antràs said Saudi Arabia represents an exceptional model in the shifting global trade landscape, differing fundamentally from traditional emerging-market frameworks. He also stressed that globalization has not ended but has instead re-formed into what he describes as fragmented integration.

Speaking to Asharq Al-Awsat on the sidelines of the AlUla Conference for Emerging Market Economies, Antràs said Saudi Arabia’s Vision-driven structural reforms position the Kingdom to benefit from the ongoing phase of fragmented integration, adding that the country’s strategic focus on logistics transformation and artificial intelligence constitutes a key engine for sustainable growth that extends beyond the volatility of global crises.

Antràs, the Robert G. Ory Professor of Economics at Harvard University, is one of the leading contemporary theorists of international trade. His research, which reshaped understanding of global value chains, focuses on how firms organize cross-border production and how regulation and technological change influence global trade flows and corporate decision-making.

He said conventional classifications of economies often obscure important structural differences, noting that the term emerging markets groups together countries with widely divergent industrial bases. Economies that depend heavily on manufacturing exports rely critically on market access and trade integration and therefore face stronger competitive pressures from Chinese exports that are increasingly shifting toward alternative markets.

Saudi Arabia, by contrast, exports extensively while facing limited direct competition from China in its primary export commodity, a situation that creates a strategic opportunity. The current environment allows the Kingdom to obtain imports from China at lower cost and access a broader range of goods that previously flowed largely toward the United States market.

Addressing how emerging economies should respond to dumping pressures and rising competition, Antràs said countries should minimize protectionist tendencies and instead position themselves as committed participants in the multilateral trading system, allowing foreign producers to access domestic markets while encouraging domestic firms to expand internationally.

He noted that although Chinese dumping presents concerns for countries with manufacturing sectors that compete directly with Chinese production, the risk is lower for Saudi Arabia because it does not maintain a large manufacturing base that overlaps directly with Chinese exports. Lower-cost imports could benefit Saudi consumers, while targeted policy tools such as credit programs, subsidies, and support for firms seeking to redesign and upgrade business models represent more effective responses than broad protectionist measures.

Globalization has not ended

Antràs said globalization continues but through more complex structures, with trade agreements increasingly negotiated through diverse arrangements rather than relying primarily on multilateral negotiations. Trade deals will continue to be concluded, but they are likely to become more complex, with uncertainty remaining a defining feature of the global trading environment.

Interest rates and artificial intelligence

According to Antràs, high global interest rates, combined with the additional risk premiums faced by emerging markets, are constraining investment, particularly in sectors that require export financing, capital expenditure, and continuous quality upgrading.

However, he noted that elevated interest rates partly reflect expectations of stronger long-term growth driven by artificial intelligence and broader technological transformation.

He also said if those growth expectations materialize, productivity gains could enable small and medium-sized enterprises to forecast demand more accurately and identify previously untapped markets, partially offsetting the negative effects of higher borrowing costs.

Employment concerns and the role of government

The Harvard professor warned that labor markets face a dual challenge stemming from intensified Chinese export competition and accelerating job automation driven by artificial intelligence, developments that could lead to significant disruptions, particularly among younger workers. He said governments must adopt proactive strategies requiring substantial fiscal resources to mitigate near-term labor-market shocks.

According to Antràs, productivity growth remains the central condition for success: if new technologies deliver the anticipated productivity gains, governments will gain the fiscal space needed to compensate affected groups and retrain the workforce, achieving a balance between addressing short-term disruptions and investing in long-term strategic gains.