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Friday October 10, 2008 MYT 4:26:25 PM

As Asian markets close lower on 'Black Friday' European markets open lower (4th update)


TOKYO: As Asian markets tumbled to close lower on what traders called 'Black Friday' in the wake of the overnight fall in Wall Street, European bourses were opening as much as 10 percent lower.

Japan's key stock index plunged a stunning 9.6 percent Friday to close out its worst week in history as frantic investors worried about a global recession dumped stocks after huge losses on Wall Street.

The benchmark Nikkei 225 index tumbled 881.06 points to 8,276.43, its lowest since May 2003.

It was its biggest one-day percentage loss since the stock market crash of October 1987.

"Selling is unstoppable in New York and Tokyo,'' said Yutaka Miura, senior strategist at Shinko Securities Co. Ltd.

"Investors were gripped by fear.''

The index dropped by more than 11 percent at one point but recovered modestly in the afternoon.

Still, investors reeled from a brutal week.

On Wednesday, the index had plunged 9.4 percent.

Since last Friday, the Nikkei has lost nearly a quarter of its value.

The massive sell-off across Asia follows a 7.3 percent overnight drop in the Dow Jones industrial average, which closed below the 9,000-level for the first time in five years.

Accelerating the pessimism were insolvencies in the insurance and real estate sectors that weakened confidence the world's No. 2 economy would weather the global financial crisis relatively unscathed.

Yamato Life Insurance Co. went bankrupt Friday, becoming the first major Japanese financial company to collapse on the fallout from the U.S. credit crisis.

On Thursday, New City Investment Corp.'s bankruptcy filing made it Japan's first real-estate investment trust to fail.

The sharp declines prompted the Tokyo bourse and the Osaka Securities Exchange to briefly suspended some futures and options trading during the morning.

Friday's developments left individual investors in Tokyo shellshocked.

Kenji Akasaka, 69, president of a local printing company, said he had never seen it this bad in the 40 years he has traded stocks.

He said he invests mainly in blue-chips including Toyota Motor Corp. and Nintendo Co. - both of which have lost about half their value over the last year.

"I pray before I go to bed that the Dow will recover,'' said Akasaka, 69, as he scanned a monitor displaying the latest market levels.

"I get sleepless, thinking about losses.''

Japanese Economy Minister Kaoru Yosano sought to reassure the country even as markets tumbled.

"We need to make sure that we don't get pulled too much by global tides,'' Yosano said.

"I hope investors Japan's makes decisions calmly based on Japan's economic fundamentals.''

"We are seeing a meltdown in the world stock market due to growing fears over a global recession,'' said Kazuhiro Takahashi, general manager at Daiwa Securities SMBC Co. Ltd.

"Selling is unstoppable in New York and Tokyo. Investors were gripped by fear,'' said Yutaka Miura, senior strategist at Shinko Securities Co. Ltd.

"They were worried about a severe slump in the global economy.''

Overnight, the Dow's 2,271-point tumble over the last seven sessions was its steepest seven-day point drop ever.

Its seven-day percentage decline of 20.9 percent is the largest since the seven-day plunge ending Oct. 26, 1987, when the Dow lost 23.8 percent.

That sell-off included 'Black Monday', the Oct. 19, 1987, market crash that saw the Dow fall nearly 23 percent in a single day.

Asia's falls come as finance ministers and central bankers from the Group of Seven industrialized nations prepared to meet later Friday in Washington.

"Investors are not so sure that the G7 will announce effective measures to contain the global financial crisis,'' Miura of Shinko Securities said.

All sectors posted huge losses, with insurance, real estate, steel and pharmaceutical issues taking especially big hits.

Japan's broader Topix index slumped 6.91 percent.

In currencies, the dollar was trading at 98.96 yen Friday afternoon in Asia from 98.92 yen late Thursday.

The euro stood at US$1.3516 from US$1.3560. apan's benchmark Nikkei stock index closed down 9.62 percent at 8,276.43 on Friday.

Australian market watchers called it "Black Friday.''

The benchmark Australian S&P/ASX200 plummeted 8.34 percent, or 360.2 points, to close at 3960.7, its biggest one-day percentage loss ever.

Together with the 8.2 percent plunge on the broader All Ordinaries index - which marked its greatest loss in 21 years - Friday's session wiped 106 billion Australian dollars (US$70 billion) from the value of stocks.

Roger Chandler, senior private client adviser with ABN AMRO Morgans in Sydney, said low investor confidence was mostly to blame.

"It's way oversold in my opinion and we haven't reached the bottom yet,'' he warned.

Nearly every stock on the Australian market fell Friday.

The banking and resource sectors were down, and the big miners were hammered: BHP Billiton was down A$2.10, or 7.04 percent, to A$27.74, while rival Rio Tinto shed A$5.01, or 6.42 percent, to A$73.00.

Lucinda Chan, associate director of Macquarie Equities in Sydney, called the market moves "ghastly.''

"It is a very different and very unprecedented climate at the moment,'' she said.

"Growth is going to be a major concern in this market and that is why the Australian market is getting a very hard pinch, because we are a commodity export nation.''

Australia's prime minister sought to reassure Australians that the economy was strong enough and that their money was safe.

"We are different to banks around the world, our banks are in a strong position,'' Rudd said, noting Australians have long had access to a "depositors first scheme.''

"If ever any bank got into trouble at any time, the depositors would have first recourse,'' he said.

New Zealand's benchmark NZX-50 index fell 4.72 percent in trading Friday, its biggest one-day fall since Oct. 24, 1997, at the height of the Asian financial crisis.

At closing Friday the index had slumped 139.08 points to 2,805.31 points, it's worst performance in six consecutive days of declines.

Over the past six trading days the market has shed 427.78 points, or 14.4 percent.

Philippine shares have plummeted for the sixth straight session, tracking a global sell-off as investors rush to cut losses.

The Philippine Stock Exchange Index on Friday fell 190.64 points, or 8.3 percent, to close at 2,097.80.

It has lost 19.7 percent since Oct. 16.

Decliners outnumbered gainers 135 to 7, with 12 stocks unchanged.

All sectors ended in the red.

Claire Quiray, analyst with Accord Capital Equities Inc., says "fear and uncertainty'' continue to rule investor sentiments.

Grace Cerdenia, managing director of 2tradeasia.com, says the global sell-off is pressuring local clients to "sell even at a loss.''

Top-traded Philippine Long Distance Telephone Co. tumbled 8.55 percent at 2,245 pesos.

Ayala Corp. lost 9.23 percent at 226 pesos.

South Korean share closed sharply lower following another steep decline on Wall Street and falls in regional markets.

The benchmark Korea Composite Stock Price Index fell 4.1 percent, or 53.42 points, to finish at 1,241.47.

At one point the Kospi fell as much as 9 percent.

The Kospi declined 13 percent this week. For all of 2008, it has declined 35 percent.

The FTSE 100 index of leading British shares plunged 7.1 percent in the first half hour of trading on the London Stock Exchange Friday morning, tracking steep declines in Europe, Asia and the U.S.

Fears that the deepening credit crisis will result in the failure of more financial companies continued to grow.

Within minutes of the market opening, the FTSE lost 10 percent to 3,887 points - the first time it had dropped below 4,000 points in five years.

The index then recovered to 4,009 points at the end of the first half hour.

The falls were led by banks, which were offered 50 billion pounds (US$84 billion) worth of direct investment by the government earlier this week.

HBOS PLC fell 22 percent, Barclays PLC dropped 15 percent and Lloyds TSB Group PLC lost 13 percent.

There were similar losses across Europe.

Paris's CAC 40 dropped 8.6 percent to 3,147.

Germany's DAX fell 9.2 percent to 4,439.

In German early trade financial companies and industrials posted some of the largest drops.

Insurer Allianz was down nearly 12 percent at euro70.46 (US$81.03), while Deutsche Bank fell 11 percent to euro32.70 (US$44.15).

Chemical company BASF was down 11 percent at euro25.20 (US$34.02), and industrial company Siemens was down more than 10 percent at euro45.40 (US$62.12).

Russian stock exchanges postponed trading Friday after massive selloffs on Wall Street and Asian markets.

Representatives of the MICEX and RTS exchanges said they suspended regular trading until further notice under orders from financial regulators.

Limited trading and repo auctions were allowed.

Both indexes were up sharply Thursday as investors regained some of the losses suffered early in the week.

The RTS index - widely seen as the economic benchmark - gained 10.9 percent to close at 844.7 points, while MICEX, where most of Russia' trading takes place, ended trading up 9.8 percent at 700.4.

But fears that steep declines in the U.S. and Asia would spark similar selloffs in Russia apparently led regulators to suspend trading.

Russia's once-booming stock market has racked up huge losses in recent months, with the RTS index dropping more than two-thirds since May.

The market is plagued by the global financial chaos, dropping prices for oil - the backbone of Russia's economy - and concerns in the wake of Russia's war with Georgia.

The KL Composite Index fell to more than 28-month low when it skidded 30.65 points or 3.16% to 938.24 at midday.

The broader market was weak with declining stocks hammering advancers by more than 14 to one while there was a sharp increase in volume of shares transacted.

There were 42 gainers, 616 losers and 106 counters unchanged. Turnover was 352 million shares valued at RM715mil.

At 9.05am, the KLCI was down 22.83 points to 946.06. Turnover was 33 million shares valued at RM55.13mil.

There were 15 gainers, 181 losers while 25 counters were unchanged.

Singapore’s Straits Times Index opened 7.3% down but managed to reduce the losses, with the STI down 6.26% to 1,971 at 9.05am.

Later Singapore’s Straits Times Index lost 6.58% to 1,964.37

Indian shares dropped sharply on opening Friday over growing worries about a global recession.

In early trading, the Bombay Stock Exchange's benchmark 30-stock Sensex plunged 642 points, or 5.7 percent, to 10,686 points.

On the broader National Stock Exchange, the 50-company S&P Nifty index has declined 5.1 percent to 3,332.5 points.

The Sensex dropped 1,088 points seconds after opening to a low of 10,239.8 points tracking a sell-off on Wall Street that sparked off a dive in Asian stocks.

The markets pulled back slightly after India's central bank almost immediately announced an additional 1 percent cut in the cash reserve ratio, or the money banks are required to keep on hand.

The announcement will push 600 billion rupees (US$12.8 billion) into the system.

This takes the cash reserve ratio to 7.5 percent and will come into effect from Saturday.

The Reserve Bank of India said in a statement the decision was taken "on a review of the evolving liquidity situation in the context of global and domestic developments.''

The central bank initially cut the cash reserve ratio by 50 basis points to 8.5 percent four days ago in a policy reversal of months of monetary tightening to curb inflation.

Banks were the biggest losers with ICICI Bank off 12.5 percent, followed by HDFC Bank down 9 percent and State Bank of India down 6 percent.

The sell-offs came as finance ministers and central bankers from the Group of Seven industrialized nations prepared to meet Friday.

Hong Kong's key stock index had tumbled 7.2 percent as worried investors gave up holdings after steep losses in Wall Street overnight and regional bourses.

The blue chip Hang Seng index plunged 1,146.37 points, or 7.2 percent, to 14,796.87 Friday after falling by more than 9.5 percent at one point.

It is the first time the benchmark index has fallen below the 15,000-level since January 2006.

The sharp decline comes after the Dow Jones industrial average plunged more than 7 percent in New York on Thursday on persistent worries about fallout from the credit crisis.

Hong Kong's stock index has fallen 16.3 percent in the past week and 42.7 percent since the beginning of the year.

Hong Kong's key stock index tumbled more than 8 percent in early trade.

The blue chip Hang Seng index fell 1,293.9 points, or 8.1 percent, to 14,649.34 within the first hour of trading.

The index rose 3.3 percent a day before.

"There's no bottom to the stock markets now. There's no clue when it will stop,'' said Francis Lun, general manager at Fulbright Securities Ltd.

Analysts also said there's pressing need for the U.S. to implement the US$700 billion rescue plan, which was passed by Congress last week, to lift the global sentiments.

"There's nothing Hong Kong could do to help the market; it's all up to the U.S.,'' said Ernie Hon, an analyst from ICEA Securities.

The blue chip Hang Seng index had 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.

The president of the Indonesian stock exchange says trading will be suspended indefinitely "to prevent deeper panic" after another huge drop on Wall Street.

Indonesian authorities planned to reopen the market on Friday morning after a suspension was imposed Wednesday.

But a last-minute change of plan has been announced after Asian stocks tumbled Friday morning amid fears of a global economic downturn.

Bourse President Erry Firmansyah says, "The situation is not yet conducive. This is to prevent deeper panic. It will be closed indefinitely while we will continue to monitor."

Market jitters have driven down the benchmark JSX index 21% this week.

The index is down 47% this year, making it one of the worst performers in Asia

South Korean share prices plunged and the benchmark Korea Composite Stock Price Index fell 7.1 percent, or 92.05 points, to 1,202.84 after about the first hour of trading.

At one point the Kospi fell as much as 9 percent.

The Turkish stock market has dropped more than 8 percent at the opening of trading Friday, following a sharp slide in world markets.

The Istanbul IMKB benchmark index fell 2,498.72 points to 28,379.99 at the beginning of morning trading Friday.

Turkey's currency, the lira, slid against foreign currencies and reached 1.43 against the U.S. dollar, compared to Thursday's close of 1.38.

In Latin American stocks ssank for the fourth straight day Thursday (Friday morning Malaysian time) day despite efforts by Brazil, Mexico and other countries to pump capital into their economies and sell dollar reserves to ease credit and prop up currencies.

Brazil's Ibovespa index rose 4.3 percent to 40,262 in the morning, only to reverse course and close down 3.9 percent at 37,089, erasing the gains of the past two years.

For the second day in a row, Brazil's central bank sold dollars in a bid to stabilize the real against the U.S. dollar.

The bank auctioned off US$911 million that will eventually be returned to the government, then sold an undisclosed amount that will not return.

Brazil also said it would free up about US$10 billion in credit by easing limits on bank reserves.

Together, the moves strengthened Brazil's currency to about 2.2 per dollar, better than 2.3 a day earlier.

Argentina's Merval index led regional losses, plummeting 5 percent to 1,287 after opening sharply higher.

Colombia's IGBC sagged 2.3 percent to 8,216.

Chile's IPSA fell 1.6 percent to 2,202.

Mexico's IPC was down 1.8 percent at 20,310 points a day after President Felipe Calderon unveiled plans for 53 billion pesos (US$4.4 billion) in emergency infrastructure spending to inject funds into the economy.

And the Bank of Mexico put annual inflation at 5.5 percent, down from 5.6 percent last month, due to signs that food prices are leveling off.

A Central Bank auction of US$2.5 billion in reserves helped the peso recover after briefly touching 14 to the dollar on Wednesday.

The peso was trading at around 12.5 to the greenback on Thursday.

The markets' early gains evaporated as disappointing auto-sales figures and credit concerns in the U.S. dragged down Wall Street and stocks around the world, said Enrique Alvarez, head of research for Latin American financial markets at consulting firm IDEAglobal.

Latin America, Alvarez said, remains "very susceptible to the panic level'' from fears that a global recession will reduce demand for regional commodities including metals, oil and agricultural goods.

No country has been immune. Paraguay, one of the region's economic lightweights, saw its currency, the Guarani, fall 5.3 percent against the dollar Thursday despite a government move to sell US$30 million in reserves.

Christopher Garman, head of the Eurasia Group's Latin America practice, said the deepening crisis could lead Brazilian President Luiz Inacio Lula da Silva to adopt more conservative fiscal policies.

"In moments of crisis, Lula tends to rely on his more-orthodox financial advisers,'' Garman said. But he added that the president would be hard-pressed to roll back popular spending programs.

The crisis also could lend weight to Mexico's attempts to push through reforms to state oil company Pemex, Garman said. - AP


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