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HONG KONG, March 18 (Xinhua) -- The world is moving into the second wave of the financial crisis, which will be symbolized more by the deterioration in the global business cycle than the financial market itself, said Stephen Roach, chairman of the Hong Kong-based Morgan Stanley Asia.
"I think the second wave will be driven by the weakening of profitability of corporations around the world and that will have a negative impact on their ability to pay back loans to banks and other financial institutions," said Roach in an exclusive interview with Xinhua at Morgan Stanley Asia's headquarters.
The first wave came about through the so-called subprime crisis, sparking a broadly based and severe recession in the world economy, he said.
Out of the recession, now comes further weakness in loans outstandings by financial institutions, which will have further negative impact on the earnings of the financial institutions.
"So I think the second wave is just beginning, which reflects more the impact of global business cycle than the credit market contagion itself," said the chairman.