WORLD / Asia-Pacific
Asian stocks plunge after US sell-off
(AP)
Updated: 2007-03-14 16:15
A pedestrian walks past a stock index board in Tokyo March 14, 2007. The
Nikkei average was down 2.77 percent on Wednesday afternoon. [Reuters]
Asian stocks plunged Wednesday after Wall Street chalked its
second-biggest point drop in four years and rattled already nervous
markets worldwide.
The tumble extended a couple weeks of international trading turmoil
rooted in concerns about overheated global markets and slower growth in
the American economy, a major export market for Asian companies.
Concern about US sub-prime lenders and lackluster retail sales pushed the
Dow Jones industrials down nearly 2 percent overnight, sparking selloffs
across Asia.
Stocks in Japan, Hong Kong and Australia all fell more than 2 percent,
while shares in Singapore, India, Malaysia and the Philippines tumbled at
least 3 percent.
The benchmark Composite Index on the Shanghai Stock Exchange closed at
2,906.33 points on Wednesday, down 1.97% or 58.46 points from the
previous close.
At the Tokyo Stock Exchange, the region's biggest bourse, the benchmark
Nikkei 225 index sank 501.95 points, or 2.92 percent, to finish at
16,676.89 points. Foreign investors who bought up stocks during the
recent rally led the selling, traders said.
Hong Kong's Hang Seng index was down 2.8 percent, Indian stocks dropped 3
percent, while Philippine stocks plunged 3.4 percent.
Overnight, the Dow fell 242.66, or 1.97 percent, to 12,075.96 amid
concerns about US sub-prime lenders, who provide mortgages to people with
poor credit. The US Commerce Department also said sales at retailers rose
a less-than-expected 0.1 percent in February, suggesting consumer
spending might be waning.
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"The US sub-prime concern has cast a great shadow on Asia. The worry is
that it could spill over and cause the US economy to slow down, and this
will cause a domino effect on the world economy," said Lee Cheng Hooi,
technical analysis manager at EON Capital in Kuala Lumpur. "There could
be more bloodbath to come."
Still, other analysts maintained that Asia's economic fundamentals remain
strong and that the recent round of declines in stock prices were more
likely a correction to cool markets that had risen too far too fast over
recent months.
"The sell-off is in sympathy with the sharp sell-off we saw overnight on
Wall Street, and it highlights the continued nervousness out there," said
David Cohen, chief of Asian economic forecasting at Action Economics in
Singapore.
"In perspective you could still say that this is a correction after the
strong rally that was experienced for the previous several months around
the world," he said.
While the US retail sales data and mortgage news that prompted the
sell-off on Wall Street "are a little concerning," fundamentals such as
strong US jobs data released Friday were still supportive of global
equities.
"The world economy seems to be remaining on an upward trajectory," Cohen
said.
The slump reversed a modest recovery in global markets from even bigger
losses that started late last month with a sharp sell-off in Chinese
stocks February 27, which contributed to a 416-point drop in the Dow
later that day.
In India, jittery investors sold off almost every blue chip stock,
dragging the 30-share Sensitive Index, or Sensex, the benchmark index of
the Bombay Stock Exchange, down by 397 points, or 3 percent, to 12,585.70
points in midday trading.
Indian shares have seen wild swings each time the global markets have
turned weak. The Sensex fell 43 percent in May-June last year, only to
bounce back to hit record highs. The Sensex reached an all-time high of
14,643 on February 7, before losing about 2,000 points, or 14 percent, in
the latest round of global declines.
Elsewhere Wednesday, Sydney's S&P/ASX 200 fell 2.1 percent, Singapore's
Straits Times benchmark was down 3.17 percent, and South Korea's Kospi
closed 2.0 percent lower.
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