Four days after the Japanese package was revealed, South Korea revealed a package valued at around $US20 billion in a similar mix of spending and some tax cuts, with some assistance to try and boost research and development.
No resignations in South Korea, but the won and the market came under pressure. This week the South Korean central bank kept its key interest rate steady on 5.25%, despite strains on the currency, inflation and the country's trade account.
Then yesterday Taiwan announced a NT$180.9 billion ($US5.6 billion) package of spending and tax cuts to bolster economic growth and revive the market after a 26% slump this year in stock prices.
But the main Taiex index ignored the Government's move and fell another 2.6% yesterday to a two- year low, despite Premier Liu Chao-shiuan saying that the government will cut the tax on stock transactions in half to 0.15% and provide subsidies to low-income families.
Taiwan, along with Russia, China, Brazil, India, Malaysia, South Korea and a host of other countries are seeing a major turnaround in sentiment among big western investors towards emerging markets.
They are no longer seen as investment safe havens and investors are leaving them as fast as they can, meaning downward pressure on stocks and currencies.
According to a report in the Financial Times western investors have withdrawn almost $US30 billion from emerging country bond and sharemarkets, and the pace of withdrawals has accelerated in the past week,
Driving this is a combination of credit crunch, the faltering health of the American banking and financial systems, slowing economic growth in the US, Japan and Europe and general concerns about politics: especially in Thailand, Malaysia and Russia.
It's nowhere near the pace of 1997, but as we said last week, there's the faintest of tingling there, and many western investors still remember the pressures and problems of the last Asian crisis.
Of course emerging economies are much different these days with huge foreign reserves and more open economies and markets, but after being battered by the credit crunch, western investors are jumpy and looking to protect themselves at all costs.
Investors headed for the exits as rising fears over slowing world growth and the state of the banking system over the past week added pressure on emerging markets – which were already reeling from weaker commodity prices, inflationary pressures, a stronger dollar and geopolitical concerns.
Because the global economy is slowing and especially the US, Europe, Japan and even China, emerging economies are also sluggish. And so are their stockmarkets.
The benchmark MSCI emerging market index is off around 5% in the past week and 22% over the past three months. That was after proving to be quite resistant to the pressures from the credit crunch.
The hardest hit stock markets in dollar terms are Ukraine, which has fallen 59% this year in part on geopolitical worries (i.e. Russia) China, down around 59% per cent because of a reaction to the huge run up last year; Hungary, down 49%; Pakistan, down 47% (and controls on trading at times) amid political uncertainty; and Vietnam, down 46% because of a sharp rise in inflation.
China yesterday saw the CSI 300 index, which tracks yuan-denominated A shares listed on China's two exchanges, Shanghai and Shenzhen, fell 3.3%, to 2,072.13 at the close, the lowest since January 4, 2007.
That means all the gains of the 2007 bubble year have now been wiped out.
Russia has been under particular pressure, with the RTS stockmarket index off 46% since its peak on May 19.
The Georgia adventure and attacks on leading local and foreign businesses and businessmen have made investors very nervy; tens of billions of dollars has been taken out of the market in the past month. The market has lost $US750 billion in value since the May peak.
The Russian government is trying to ease the credit crunch by pumping money into the market (an estimated $US12.5 billion this week alone) and trying to get backs not to make margin calls on leading businessmen.
Taiwan's economy grew at the slowest pace in more than a year last quarter after, thanks to easing demand from its two big markets: the US and China.
Exports slowed in July and with inflation high, consumers aren't spending, hence the move by the government to try a bit of stimulation by helping poorer families cope with higher energy costs.
Taiwan's economy grew 4.3% in the second quarter, the weakest in more than a year. Inflation rose at an annual 5.7% last month, just under a 14 year high.
Japan, South Korea and Taiwan have no doubt looked at the example of the US's venture into a bit of pump priming with the $US120 billion tax rebate to taxpayers (and some lurks and perks for business and others to take the total value of the package up to around $US160 billion.
The US pump priming lasted two and a bit months and has now disappeared. Some congressional democrats are talking about a smaller, more targeted $US50 million package before the election, but there is not much time to do it and the Bush Administration has to support it.
The US budget deficit for this year to September 30 will be around $US402 billion, up 153%, the 2009 deficit was forecast at $US482 billion before the rescues of Fannie Mae and Freddie Mac.
The US has very little firepower left to help the struggling in its economy this year.
Bloomberg reported that the income subsidies will be implemented next month and will aim to help 450,000 low-income families cope with higher energy prices. There will also be cuts in inheritance tax and corporate income tax will also be trimmed, but no details were given.
