Thu, Jun 01, 2006 - Page 11 News List

Asian markets take a beating in wake of New York's drop

AFP , HONG KONG

Asian stocks took a fresh drubbing yesterday after a sharp sell-off on Wall Street overnight, with investors fearful this month's correction still has much further to go, dealers said.

They said nervous regional markets were hit hard by the 1.63 percent fall in New York where investors were rattled by a spike in oil prices and a large drop in consumer confidence figures, compounding concerns over risks to inflation and growth.

Tokyo was down 2.47 percent and Mumbai in full retreat with a loss of more than 6 percent in mid-day trade but the impact could have been even greater if Hong Kong, Seoul and Taiwan had not been closed for holidays.

The danger now is that if Wall Street has another bad day, the closed markets will have even more ground to make up today and Hong Kong, one of the most international in the region, could have an especially hard time.

In Tokyo, the Nikkei 255 index closed below 15,500 points for the first time in three months, extending the recent slide in worrying fashion. Crucially, foreign investors remained net sellers in pre-opening orders, fanning concerns about an outflow of funds from Asian markets en masse.

Worse still, there is a potential overhang from investors who borrowed money to bet the market would rise but now face pressure to close those positions.

In Sydney, down 2.03 percent, CMC Markets senior dealer James Foulsham said investors remained on edge after recent losses and sold aggressively.

With the negative US lead, "people were set to quickly unwind positions," he said, adding that a fall in metals prices put pressure on the leading stocks.

In Mumbai, the sell-off threatened to turn more serious still as fund outflows prompted concerns about the current account deficit. However, late buying helped the Indian benchmark to retrace some lost ground and it closed down 3.6 percent.

Singapore was down 2.36 percent, Bangkok off 0.63 percent, Jakarta down 2.65 percent and Kuala Lumpur off 0.23 percent.

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