Worst outlook for a century as Asia markets rocked

08 October 2008 09:08  [Source: ICIS news]

SINGAPORE (ICIS news)--Asian markets tumbled 4-10% on Wednesday as nervous investors scurried to unload shares amid fears of a prolonged global recession.

 

Intense financial stress in the US and Europe was fuelling concern with economists talking about the worst outlook for a century, analysts said.

 

“A lot of headless chicken are running around, screaming ‘the sky is falling'. It is an issue of crisis of confidence,” said Song Seng Wun, regional economist at Malaysian brokerage CIMB-GK.

 

“The stock markets are already factoring that (global recession) in…People are talking about a once-in-a-century kind of event,” said Song.

 

Stock market indexes in the region fell to multi-year lows following steep losses in the US markets on Tuesday, the Dow Jones Industrial Average plunging 5.11%, or 508.39 points, to close at 9,447.11.

 

Some Asian petrochemical stocks were badly hit, with Japan's Asahi Kasei down 9.02%, Mitsubishi Chemicals tumbling 9.55% and Mitsui Chemicals shedding 13.47%.

 

Indonesia suspended trading at its stock exchange after the Jakarta Composite index shed 168.052 points, or 10.38%, at 1,451.6689.

 

At 14.23 Singapore time (06:23GMT), Japan’s Nikkei 225 slumped 9.38% to 9,203.32, Hong Kong’s Hang Seng Index was down 5.55% at 15,871.15 and South Korea’s KOSPI Composite Index retreated 5.81% at 1,286.69.

 

China’s Shanghai Stock Exchange Composite index fell 2.86% to 2,096.155 and the Taiwan Stock Exchange index declined 5.76% to 5,206.40.

 

Singapore’s Straits Times index tumbled 6.23% at 2,041.85 points, while Malaysia’s Kuala Lumpur Composite index fell 3.78% to 959.50 points.

 

The bloodbath in global equities has been continuing as panicking investors headed for the exit in the US and Europe, making massive government-led bailouts necessary, the latest being a £50bn ($88bn) bank rescue plan unveiled by the British government, analysts said.

 

“Panic will spread if [people] continue to see more and more financial institutions are in trouble,” said Song.

 

The International Monetary Fund (IMF) estimated the US financial system would incur $1.4 trillion losses, a 50% jump from its original estimate in April, as the crisis that was threatening global economic stability continued to rage, according to its Global Financial Stability Report (GFSR) released on Tuesday.

 

The multilateral institution, known for being the lender of last resort for economies, called on policy-makers to make “decisive policy measures” to immediately restore market confidence.

 

($1 = €0.73/$1 = £0.57)

  

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By: Pearl Bantillo
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