Bloodbath in Asian markets as Dow plummets
Pastor Dale Morgan
From Times Online
October 10, 2008
*Bloodbath in Asian markets as Dow plummets*
The Nikkei index had its biggest fall since the 1987 stock exchange crash
Times Online and Jane Macartney in Beijing
International crisis meeting | Emergency funding released | Timeline of
turmoil
A seventh day of devastating falls on Wall Street triggered more panic
in Asian markets this morning. Japan’s Nikkei stock average plunged 9.6
per cent on, its biggest one-day loss since the 1987 stock market crash,
on growing fears the financial crisis will spark a global recession. The
index has fallen 24 per cent this week, more than double the weekly drop
immediately after the 1987 market crash.
The selloff came as Japan’s Yamato Life Insurance company, an unlisted
insurer, collapsed with $2.7 billion in debt, although government
ministers and analysts were quick to play down the risk of contagion.
However, fear reverberated across Asia and the selling was brutally
swift with every market dropping hard at the opening, taking the MSCI
index of Asia-Pacific stocks excluding Japan down 3.5 percent to its
lowest since June 2005.
Oil prices fell to a new 12-month low below 84 U.S. dollars a barrel
amid concerns an economic slowdown would weaken demand. Even calls by
some OPEC members to cut output to shore up prices failed to instill
confidence.
London is expected to open up to 300 points lower this morning.
The Indian stock market crashed nearly 10 per cent this morning as
policymakers scrambled to avert a run on the rupee.
"This is a bloodbath. It is discomforting that global markets are not
reacting to the measures regulators have taken," Hiten Agrawal, head of
research with Angel Broking in Bombay, said.
India's central bank reacted to growing pressure on the country's
currency by slashing the proportion of cash banks are required to keep
in reserve from 9 per cent to 7.5 per cent, which will release about 6
billion rupees into the banking system.
The mood in markets took its tone from Wall Street where U.S. stocks
plummeted as investors bet recent worldwide moves to try to thaw frozen
credit markets would be insufficient to avert a global recession. The
Dow Jones Industrial Average closed down 7.3 percent.
The bloodbath quickly spread. Sydney plunged 7.0 percent, Seoul was down
7.5 percent, Shanghai lost 3.8 percent and Hong Kong plummeted 8.0 percent.
Indonesia simply announced that trading would be suspended indefinitely
– after initially planning to reopen the market after a suspension
imposed on Wednesday – to prevent deeper panic.
Oh Hyun-Soek at Samsung Securities said: “It’s beyond panic. Concerns
about the global economy are deepening further and there is no sign of
easing in the global credit crunch.”
The fear was underlined with the cost of protection against defaults in
Asia’s sovereign and corporate debt soaring to record highs.
Singapore shares dropped 7.3 percent at the opening with the Straits
Times Index down 76.2 points at 1,971.72 – its lowest since December
2004. Southeast Asia’s largest bank, DBS Group, fell 7.6 percent after
government data showed the city state was now in recession.
The island’s economy shrank at a worse-than-expected annualised,
seasonally adjusted rate of 6.4 percent in the third quarter after
declining 5.7 percent in the previous three-month period, putting the
economy into a technical recession.
But the hardest fall was in the region’s biggest market. Tokyo’s Nikkei
average had sunk 10.6 percent, or 974.12 points, to finish the morning
session at 8,183.37. That surpasses a 9.4 percent fall earlier in the
week and would be the sharpest slide since a 14.9 percent one-day
plunged during the 1987 crash.
Economics Minister Kaoru Yosano urged investors to reach calm judgments
in the face of the tumbling markets, stressing that Japan’s regional
banks were strong as a whole.
Australian shares dropped to fresh three-year lows with the benchmark
S&P/ASX 200 index down 259.2 points at 4,061.7, its lowest since May
2005. Losses this week alone have already reached 15 percent.
Even Australia's well-capitalised banks were caught up in the downturn,
being sold off sharply in line with their troubled international
counterparts.
Lucinda Chan, client advisor at Macquarie, said: "These are massive,
almost unheard of big days down. These plunges are deep and they hurt
deeply. People's nerves are really at the end of their tether. The
contagion factor is certainly very clear.”
New Zealand's benchmark NZX-50 index fell 115.6 points, or 3.9 percent,
to 2,828.5. So far this year it has fallen more than 28 percent.
Hong Kong shares plunged 8.0 percent in early trade, falling below
15,000 points for the first time in nearly three years. The benchmark.
The blue chip Hang Seng index has fallen 1,211.48 points, or 7.6
percent, to 14,731.76 minutes after trading started Friday. The index
rose 3.3 percent a day before.