Asian investors counted the cost as the region’s stock markets were poised for their worst week in at least two decades, wiping out billions of dollars of savings and retirement funds.
Japan’s Nikkei 225 Stock Average fell 11 percent yesterday on concern the deepening credit crisis will push the global economy into a recession. The MSCI Asia Pacific Index dropped 7 percent and is set for an 18 percent decline for the week, the biggest slump since the gauge was created on Dec. 31, 1987.
“I’ve lost almost 7 million yen [US$70,000] in the past year and today I cashed out,” said Motoki Tagawa, 62, a retired sales agent for General Motors Corp in Tokyo, with a Cadillac pin in his lapel. “There goes my retirement. I’ll be living in an Internet cafe.”
Investors from Sydney to Singapore stood in front of bank-window screens and electronic billboards, monitoring the market misery: Yamato Life Insurance Co files for bankruptcy; Sumitomo Trust & Banking Co cuts profit forecast; Singapore sinks into a recession. The global credit crisis sparked by the US housing market collapse has erased more than US$6 trillion in market value worldwide this week.
“The 1987 crash was over in a day or two, but this one is like a death by a thousand cuts,” said Brian Ingham, who helped start Sydney-based Nucleus Global Investors in August with the equivalent of US$16.5 million to invest in infrastructure and utility stocks. “We’ve now entered the point of unreality where I’m almost immune to what I’m seeing.”
Nucleus was down 10 percent, he said.
EVEN WORSE TIME
Ingham picked a bad time to start a fund. But in Singapore, Tiong Ying Ling is worried that she picked an even worse time to start an art collection.
Tiong, a 25-year-old management consultant, said she was trying to “summon up the guts” to cancel a S$20,000 (US$13,500) purchase of a painting by Argentine artist Guillermo Kuitca.
“I was buying art, which is, like, the worst thing — why did I do that?” said Tiong, sitting in a Starbucks cafe in the financial district. “I feel incredibly anxious and nervous. Now is the time to hold cash.”
Two tables away, Bill Tallon, 58, a partner at Philadelphia-based recruitment software company Kenexa Corp, rues the deal he got on his BMW 3-Series Coupe before his recent move from the UK.
“Don’t tell my wife what I got for that, it was devastating,” Tallon said.
He summarized his other assets, including UK property, thus: “Pension fund is absolutely atrocious; share options the same; house prices not good.”
While Tallon isn’t losing sleep over the crash just yet, other investors are up in arms.
Tan Kin Lian, former chief executive officer of NTUC Income, a Singapore insurer supported by trade unions, is organizing a rally for today at Speaker’s Corner, a park near the financial district, for investors who lost money. He has petitioned the government to help settle claims with financial institutions.
“I worry about the impact on many people in Singapore that are not well off, especially those who lost their lifetime savings,” said Tan, 60, in an e-mail.
Share declines have sparked anger among investors, directed at banks that fomented a credit crunch by packaging and reselling toxic debt.
“It’s not fair that we have to take the pain of what rich people have done to get richer,” said Takashi Yamada, 75, who lives on a pension of ¥160,000 (US$1,620) a month in Tokyo. “We will be the biggest loser of this financial turmoil because the economy will shrink and we don’t have money like bankers.”
For investors in China, this week’s slump continues a year-long decline that wiped two-thirds of the value off Shanghai’s benchmark index. A year ago, more than 200 individual investors packed the Shanghai offices of Shenyin & Wanguo Securities Co each morning. Today there were about 10.
“I can’t help counting how much money I’ve lost every day when I sleep at night,” said Wu Jinmei, a 70-year-old retired worker who brings a bottle of heart pills to the brokerage each day, after suffering a heart attack from the loss of more than half of her 80,000 yuan (US$11,700) retirement fund. “I’ve been an investor for the past 12 years and have never felt so bad.”
Many in Asia are seeking refuge in gold, up 10 percent this week.
“The phones are ringing all day,” said Hitoshi Iijima, section chief in the direct marketing group at Tanaka Kikinzoku Kogyo, Japan’s largest bullion retailer.
MORE BARS
In August, the firm sold more gold bars to investors than it bought for the first time in 41 months, Ikeda said.
Across the region, the slump is conjuring memories of the collapse of Japan’s asset bubble in the 1990s and the crisis in 1997.
“I’m worried about the future,” said Hiroko Taguchi, 73, standing in front of a Mitsubishi UFJ Securities Co office in Tokyo, watching the Nikkei 225 drop on a screen. “If America doesn’t do something about this, we’re all in trouble. I lost a lot of money during the bubble, so I stay away from the market. Investing is just too scary.”
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