Asian markets tumbled yesterday in the wake of one of Wall Street's biggest losses of the year, with Japanese stocks also taking a hit on the yen's recent strength and uncertainty over weekend elections.
Markets in Taiwan, Hong Kong, Australia, Singapore, Malaysia and the Philippines also fell sharply as international investors pulled out of riskier assets, including Asian emerging markets.
Chinese stocks, however, ended the day flat. The benchmark Shanghai Composite Index slipped just 0.03 percent after hitting an all-time record high on Thursday.
In Taiwan, the TAIEX closed down 4.22 percent to the day's low of 9,162.28 points.
Stanley Chou of Mega International in Taipei said there was ``obvious panic selling'' among retail investors, though traders insisted that the market would stabilize next week, putting the likely trading band at 9,000 to 9,450.
Investors were rattled after US markets plunged on Thursday amid worries over the US mortgage and corporate lending markets. But analysts said the sell-offs had more to do with a sudden change in sentiment than any direct link between Asian markets and US subprime mortgage woes.
"If big foreign funds have selling orders, they tend to go by region. If they sell Asia funds, they do it to reevaluate portfolios or cover losses in the US," said Rommel Macapagal, chairman of Westlink Global Equities
"But for local investors, it's a sentiment. When big drops occur, they tend to get jittery because of expectation of foreign funds selling. They tend to get out," he said.
In Tokyo, the Nikkei 225 index sank 418.28 points, or 2.36 percent, to close at 17,283.81.
Philippine stocks suffered their biggest percentage drop in 10 years yesterday, sinking 3.9 percent to 3,518.76 points. Hong Kong's Hang Seng index was down 2.76 percent at 22,570.41, while Singapore's Straits Times index slid 2.4 percent at 3,492.70.
In Seoul, the Korea Composite Stock Price Index, or KOSPI, fell 4.1 percent to 1,883.22. It was the biggest drop since June 3, 2004, when it fell 4.3 percent.
In New York on Thursday, the Dow Jones Industrial Average fell 311.5 points or 2.3 percent, to 13,473.57, its biggest point drop since Feb. 27, when the Shanghai stock market fell.
In Tokyo, Japan's Chief Cabinet Secretary Yasuhisa Shiozaki, brushed off concerns about the influence of the US stock declines on the economy in the region.
"The Japanese economy is expanding stably and I have not heard that there have been any major fluctuations in other key countries,'' Shiozaki said.
Investors in Japan were also unnerved by the yen's recently appreciation against the dollar, which erodes overseas income at the country's key exporters. The US dollar fell to ?118.70 in late trading in Tokyo, dropping from ?119.46 on Thursday in New York.
In Sydney, the benchmark S&P/ASX 200 closed down 175.6 points or 2.8 percent, an even bigger drop than the slump on Shanghai financial markets in February.
But Macquarie Bank's David Halliday said the market jolt would spare some sectors, such as resource stocks, which have less exposure to the problems in the US subprime market.
"Despite the concerns about the US sub-prime mortgage market, the demand for materials and commodities out of China and India shouldn't be affected by this," Halliday said.
Also see story:
TAIEX succumbs to Wall Street's fall
RSS