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Asia stunned by sell-off
Tokyo closes down 7%, HK off 8.5% as investors dump stocks on Fed concern
April 17, 2000: 2:46 a.m. ET
LONDON (CNNfn) - Asian stock markets crumbled Monday as investors dumped equities to seek safety in cash and bonds in reaction to record losses on Wall Street Friday. Tokyo ended down 7 percent while Hong Kong was 8.5 percent lower in late afternoon trade.
Technology-related shares suffered the sharpest falls, but the sell-off extended across the board as traders expressed little confidence that the market had bottomed out. Investors anticipated further declines in U.S. stock markets, weakened by higher-than-expected inflation numbers released last week.
The carnage on U.S. markets Friday saw the blue-chip Dow Jones industrial average plunge 5 percent while the tech-heavy Nasdaq composite fell over 9 percent to post its largest one-day decline.
Steve Barrow, market strategist at Bear Stearns in London, admitted there was uncertainty as to whether recent events were a "healthy" correction or a more panicky reaction to future monetary policy.
"Clearly the inflation numbers were very scary," said Barrow. "There is concern that the U.S. Federal Reserve has lost the plot on inflation.
The sentiment was reflected by Tokyo's benchmark Nikkei 225, which closed down 1,426 points, or 6.98 percent, at 19,008.64 as falls extended far beyond the vulnerable technology sector. It was the Nikkei's lowest close since Jan. 25.
The index had bottomed at 18,603 just after midday, weakened by an announcement that 30 index members will be dropped from the Nikkei 225 on April 24.
In Hong Kong, the Hang Seng traded at 14,771.28, above its session low, while Singapore's Straits Times was down a shade over 8 percent at 2,102.92 near the end of its trading day.
In Seoul, the Kospi index was the worst hit in the region, closing down 11.63 percent at 707.75.
In the currency markets, the dollar lost ground on the prospect of further falls on Wall Street later Monday. The yen advanced to 103.96 from 104.74 in late Friday trade in New York, while the euro moved to $0.9650 from $0.9622 on Friday.
Tokyo losses widespread
In Tokyo, blue-chip technology shares were the first to lose ground, and though there was some recovery at the end of the session Sony Corp. ended off 9.3 percent, NEC Corp. lost 10.8 percent and Toshiba fell 8 percent. The losses extended into the industrial and financial sectors, with Honda Motor losing 5 percent and Sanwa Bank closing with a 7 percent loss.
Brokerages also suffered sharp declines, with Daiwa Securities plunging 17 percent and Nomura Securities nursing a 14 percent decline. Hong Kong's Hang Seng, which is the most closely tied in Asia to Wall Street's fortunes, fell as low as 14,739, with telecom shares suffering the most.
China Telecom, the largest stock by market value, lost more than 14 percent, SmarTone Telecom was 13 percent lower and Cable & Wireless HKT was some 10 percent down in late afternoon trade.
HSBC Holdings fell more than 2 percent as the selling pressure extended to financial stocks. Even typically defensive sectors such as utilities could not escape: HK & China Gas lost 5 percent.
Among smaller markets, Sydney's new S&P/ASX200 index ended down 5.74 percent at 2,918.40. Media group News Corp. plunged 17 percent as investors bailed out of the sector and reacted to the news that chairman Rupert Murdoch was receiving treatment for prostate cancer, focusing attention on uncertainty over his succession.
Taiwan's TAIEX index was the only market in the region to gain ground, though it had fallen 5.4 percent during Saturday trade. Demand for electronics stocks pulled the index 1.43 percent higher to close at 8,993.68
Elsewhere, the only direction was down, though falls were more modest than on the Big Three Asian markets. Manila's PHS Composite ended down 4.4 percent at 1,637.54, the Set 50 in Bangkok traded off 5.2 percent by late afternoon, Kuala Lumpur's KLSE Composite shed 5.3 percent and the JSX index in Jakarta fell 4.5 percent. TOPTOP
-- Carl Jenkins (Somewherepress@aol.com), April 17, 2000