TOKYO, Japan ~ Asian stock markets buckled at the end of the week as jittery investors rushed to dump shares after another rout on Wall Street, with no sign of an end to the tremors emanating from the US mortgage sector.
From Tokyo to Sydney, Hong Kong to Singapore, weary dealers’ screens were awash with red again as fears over the fallout from problems in US credit markets continued to buffet stock markets around the world.
Seoul reeled from its biggest ever one-day points plunge on Thursday, down more than six percent in morning trade.
Market watchers said that confidence had drained out of the markets, so even though many stocks look cheap there is no obvious trigger on the horizon for a rebound in global stock markets.
“Investors have moved from being super-optimistic to super-pessimistic in a very short space of time. Really, there is no sign of this ending,” said CommSec equities economist Craig James in Sydney.
Oil prices fell as traders fretted that the current market turmoil could put the brakes on the global economy, hitting energy demand.
The yen gained sharply on the euro and dollar, lifted by growing risk aversion.
All eyes remained on Wall Street, where credit market anxiety gripped investors again on Wednesday as the fear of the unknown prompted a flight to safe haven assets such as government bonds.
Tokyo set the tone for the region, with the benchmark Nikkei index down 3.7 percent in the early afternoon, slipping below the key 16,000-point level for the first time since November.
A fresh 400-billion-yen (US$3.4-billion) injection of funds into the banking system by the Bank of Japan failed to calm frayed nerves.
Japanese banking shares in particularly took another pounding, despite their recent insistence that they have only limited exposure to the problems in US subprime mortgages to high-risk borrowers.
“The market is in full flight,” said Jeremy Hall, a Japanese equity fund manager at Henderson Global Investors in Singapore.
He said Japanese banks on a fundamental basis were “looking extremely cheap” but the Tokyo market was being driven lower by bad news from overseas.
It was a similar story across the region. Hong Kong tumbled 2.5 percent in opening trade on Thursday, Sydney was down 2.8 percent, Taipei tumbled nearly 5.0 percent, Manila slumped 3.4 percent and Singapore lost 3.46 percent.
“There are fears of a possible domino effect on international credit markets, as well as equity markets,” said Jih Sun Securities Investment Trust Co Ltd fund manager Bruce Yu in Taipei.
Seoul, which was closed on Wednesday, plunged by 6.35 percent in the steepest point slide on record as frantic investors scrambled to catch up with the heavy overseas sell-off a day earlier.
Analysts believe that Asian companies have relatively little direct exposure to the problems in risky US securities backed by subprime mortgages.
But foreign funds, reeling from heavy losses in this high-stakes form of investment, have been unloading shares to raise badly needed funds.
Elsewhere around the region, Jakarta lost 5.6 percent, Kuala Lumpur was down 3.2 percent, Bangkok dropped 2.66 percent and Shanghai gave up 1.34 percent.