Asian stock markets yesterday caught the global selling fever after new warnings of world recession and as fears grew over the future of European banks with heavy exposure to sovereign debt.
Investors across the region picked up on the mounting anxiety evident in the US and Europe, where the markets saw fresh carnage on Thursday.
Safe havens were the main beneficiaries, with gold soaring and the yield on 10-year US Treasury bonds briefly touching a new low.
Photo: AFP
Adding to woes in the region were fears that a slowdown in the galloping growth seen in China — a key driver of the world economy — could hit equities.
“Given the bloodbath seen across global equity markets overnight, it is not at all surprising to see our market experiencing sharp and broad-based losses,” IG Markets analyst Ben Potter said in Australia, adding that there was no end in sight. “From experience, these situations always go on for a lot longer than people think they should. Given the global financial crisis is still so fresh in people’s minds, the market is going to have to do a lot to win back the confidence of investors.”
Tokyo tumbled 2.51 percent, hit by the double-whammy of global fears and the persistently strong yen, with the headline Nikkei index at down 224.52 points at 8,719.24.
Sydney shed 3.51 percent. The benchmark S&P/ASX 200 was down 149.3 points at 4,101.9.
Seoul plunged 6.22 percent, with the benchmark KOSPI down 115.70 points at 1,744.88. South Korean exporters, such as Samsung Electronics and Hyundai Motor, bore the brunt of the losses.
Hong Kong dropped 3.08 percent with the benchmark Hang Seng index down 616.35 points to 19,399.92. Shanghai shed 0.98 percent, or 25.11 points, to finish at 2,534.36.
The worldwide sell-off came after Wall Street investment bank Morgan Stanley warned that the US and eurozone economies were “dangerously close” to a double-dip recession.
Stocks were further punished by a fresh round of gloomy economic data from the US, such as jobless claims, and growing doubts about the ability of European banks to withstand the 17-nation eurozone’s debt crisis.
The rout continued in European trade, with the continent’s main bourses all showing large losses in early trade.
London’s FTSE-100 index of leading shares sank 3.07 percent to 4,935.73 points, Frankfurt’s DAX 30 lost 4.41 percent to 5,355.79 points and Paris’ CAC 40 index showed a loss of 3.43 percent to 2,974.54 points.
Gold and US Treasury bonds — both safe havens in times of trouble — broke record ground, with bullion closing at a record US$1,862-US$1,863 an ounce. It had finished Thursday trade at US$1,794-US$1,795.
Yields on 10-year US Treasury bonds were down at one point on Thursday to an all-time record low of 1.974 percent, breaking the record of 2.007 percent set on Dec. 18, 2008, at the height of the US recession.
By the end of the day in New York, the 10-year US Treasury yield was at 2.07 percent, compared with 2.17 percent late on Wednesday, while the 30-year yield was at 3.42 percent, down from 3.57 percent.
A report in the Wall Street Journal that the US Federal Reserve was worried about the liquidity of major European banks contributed to the sell-off in European markets.
French lenders came under especially intense pressure, with Societe Generale losing more than 12 percent.
“Europe is frankly a mess and the United States, which I’m normally much more optimistic about, we’ve seen a crisis which was created by the partisan nature of its current politics,” said Mike Smith, head of one of Australia’s big four banks, ANZ. “That’s created further concern to what was already a pretty fragile recovery.”
Concerns were not confined to the developed world. At Deutsche Bank, economists focused on the impact of slower Chinese growth on the rest of the world.
They foresaw a “soft landing” for China this year and next, but concluded that “global stock markets will likely be negatively impacted by a Chinese slowdown.”
They said the world’s second-biggest economy would grow 8.9 percent this year, down from 10.3 percent last year, and by 8.3 percent next year, “mostly due to the effect of monetary tightening.”
Among the rows of vibrators, rubber torsos and leather harnesses at a Chinese sex toys exhibition in Shanghai this weekend, the beginnings of an artificial intelligence (AI)-driven shift in the industry quietly pulsed. China manufactures about 70 percent of the world’s sex toys, most of it the “hardware” on display at the fair — whether that be technicolor tentacled dildos or hyper-realistic personalized silicone dolls. Yet smart toys have been rising in popularity for some time. Many major European and US brands already offer tech-enhanced products that can enable long-distance love, monitor well-being and even bring people one step closer to
Malaysia’s leader yesterday announced plans to build a massive semiconductor design park, aiming to boost the Southeast Asian nation’s role in the global chip industry. A prominent player in the semiconductor industry for decades, Malaysia accounts for an estimated 13 percent of global back-end manufacturing, according to German tech giant Bosch. Now it wants to go beyond production and emerge as a chip design powerhouse too, Malaysian Prime Minister Anwar Ibrahim said. “I am pleased to announce the largest IC (integrated circuit) Design Park in Southeast Asia, that will house world-class anchor tenants and collaborate with global companies such as Arm [Holdings PLC],”
TRANSFORMATION: Taiwan is now home to the largest Google hardware research and development center outside of the US, thanks to the nation’s economic policies President Tsai Ing-wen (蔡英文) yesterday attended an event marking the opening of Google’s second hardware research and development (R&D) office in Taiwan, which was held at New Taipei City’s Banciao District (板橋). This signals Taiwan’s transformation into the world’s largest Google hardware research and development center outside of the US, validating the nation’s economic policy in the past eight years, she said. The “five plus two” innovative industries policy, “six core strategic industries” initiative and infrastructure projects have grown the national industry and established resilient supply chains that withstood the COVID-19 pandemic, Tsai said. Taiwan has improved investment conditions of the domestic economy
Sales in the retail, and food and beverage sectors last month continued to rise, increasing 0.7 percent and 13.6 percent respectively from a year earlier, setting record highs for the month of March, the Ministry of Economic Affairs said yesterday. Sales in the wholesale sector also grew last month by 4.6 annually, mainly due to the business opportunities for emerging applications related to artificial intelligence (AI) and high-performance computing technologies, the ministry said in a report. The ministry forecast that retail, and food and beverage sales this month would retain their growth momentum as the former would benefit from Tomb Sweeping Day