Asian markets tumble as financial fears deepen

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(Agencies/Xinhua)
Updated: 2008-09-18 15:10

HONG KONG -- Asian stocks tumbled Thursday, tracking declines on Wall Street as investors feared more companies could succumb to the global financial crisis that forced the US to bail out troubled insurer American International Group Inc.

Every regional benchmark fell deeply in the red.

Hong Kong's Hang Seng Index led the region's losses, tanking 1,272.86 points, or 7.22 percent, to 16,364.33, its lowest level in over two years.

In Japan, the Nikkei 225 stock index was down 445.67 points, or 3.79 percent, at 11,304.12. Australia's S&P/ASX200 index fell more than 3.5 percent, South Korea's Kospi lost 3.6 percent and Shanghai's index fell 5.8 percent.

The losses tracked US markets, where the Dow Jones industrial average fell about 450 points, or 4.06 percent, to 10,609.66.

Investors were unsettled by the Federal Reserve's $85 billion loan to AIG, the huge US insurer that lost billions in the risky business of insuring against bond defaults. It was the latest financial giant to fall in a historic financial crisis on Wall Street that's already claimed investment banks Lehman Brothers and Merrill Lynch.

"It's a complete collapse of confidence," said Francis Lun, general manager of Fulbright Securities Ltd in Hong Kong. "The financial crisis in the US is hitting everyone, everyone is running for cover. If the largest insurance company can fail, than no one is safe."

As equities markets staggered, investors fled to gold, seen as a safe haven in times of trouble. Gold for December delivery rose as much as $90.40, or 11.6 percent, to $870.90 an ounce in after-hours trading on the New York Mercantile Exchange after jumping $70 to settle at $850.50 in the regular session.

Oil rose above US$97 in Asian trade Thursday, extending its big gains overnight. The dollar was little changed at 104.32 yen and the euro rose to US$1.4345.

Financial stocks across Asian went into a tailspin.

Japan's three megabanks fell hard: Mizuho Financial Group, Inc. sank 7.2 percent, Mitsubishi UFJ Financial Group, Inc. shed 4.6 percent, and Sumitomo Mitsui Financial Group retreated 7.4 percent.

Leading China lender Industrial & Commercial Bank of China Ltd, or ICBC, fell over 5 percent in Hong Kong.

Macquarie Group Ltd., Australia's biggest investment bank and securities firm, took an 18 percent nosedive.

Richard herring, the director of trading at Burrell Stockbroking, said Australian investors were nervous about AIG bailout.

"It has actually opened up a whole lot of other questions for investors to answer and that is: AIG is on the rack, what else is potentially out there that could go under?" Herring said.

Major exporters including auto makers and electronics firms also wilted, hurt by a sagging dollar and slowing overseas markets.

In Japan, Nintendo Co., maker of the popular Wii game console, tumbled 4.4 percent after earlier hitting a near year-low.

China stocks plunge nearly 6% after Wall Street losses

Declines on the China market worsened in the early session on Thursday after heavy losses on Wall Street and reports by more Chinese banks of holdings in failed U.S. investment bank Lehman Brothers.

The benchmark Shanghai Composite Index plummeted 5.84 percent to close the morning session at 1,816.44 points, led by bankers and insurers.

The losses tracked overnight losses on Wall Street, where the Dow Jones industrial average slid 449.36 points, or 4.06 percent, to 10,609.66.

The Industrial and Commercial Bank of China nosedived 7.89 percent to 3.15 yuan (0.46 U.S. dollars) after the bank reported its holdings at 151.8 million U.S. dollars the previous day.

The Bank of China said its total exposure was 128.82 million U.S. dollars late on Wednesday. Its share prices went down 4.38 percent to 2.84 yuan in the morning.

China Merchants Bank, the first Chinese bank to report holdings of 70 million U.S. dollars worth of bonds issued by Lehman, lost 3.59 percent to 13.95 yuan after a two-day plunge of the 10 percent daily limit.

China Ping An plummeted by the daily limit of 10 percent finished the morning session at 30.2 yuan, while China Life Insurance was down 9.42 percent to 17.99 yuan.

The property sector also reported heavy losses, and helped drive the index lower. Chongqing Yukaifa fell 10.04 percent to 4.3 yuan, and China Vanke fell 5.23 percent to 4.89 yuan.

The Shenzhen Component Index closed at 6,338.19 points, down 341.87 points, or 5.12 percent.

Losers sharply outnumbers gainers by 861 to 18 on the Shanghai market, and 722 to 11 on the Shenzhen market.