Asian shares sank yesterday on fears that a deepening US financial sector crisis and soaring oil costs would further sap faltering world economic growth.
The plunge came as concerns grew about the solvency of US mortgage finance titans Fannie Mae and Freddie Mac, which underpin trillions of dollars in home loans and whose failure would be viewed as catastrophic.
Japan, Asia’s biggest bourse, slid nearly 2 percent, Taiwan tumbled 4.5 percent, Hong Kong fell 3.8 percent and China closed down some 3.5 percent even though the US government has just extended a lifeline to the mortgage giants.
“The market has been absolutely savaged today,” said Dominic Vaughan, a senior dealer at CMC Markets in Australia, where the stock market ended more than 2 percent down.
“There is still a belief that any measures done by the US government or the US Federal Reserve may not be enough,” he said.
The US plan announced on Sunday provides access to substantially increased credit to the two firms, which own or guarantee almost half of all US home loans and are in crisis owing to the worst US housing downturn in decades.
But the initiative has so far failed to patch up investor confidence, which had already been shredded by slowing economic growth and falling business profits as inflation surges thanks to soaring crude oil and food prices.
Oil was trading at around US$145 per barrel yesterday, only a little shy of all-time highs above US$147 scaled last week. The price of black gold has doubled over the past year and is up five-fold since 2003.
Elsewhere in Asia, Indian shares plunged 4 percent, Singapore was more than 3 percent down and South Korea closed 3.2 percent lower as trading screens across the region turned red.
“We may witness more selling pressure in the near term on concerns that the worst of the US credit crisis is not over yet,” Linus Yip at First Shanghai Investments in Hong Kong told Dow Jones Newswires.
Asia’s smaller markets also suffered, with New Zealand share prices hitting a three-year low after a 1.3 percent slide. Indonesian shares were down more than 1 percent, while the Philippine market closed 1.79 percent lower.
“Negative global news is keeping investors away,” said Bhaskar Kapadia of Pyramid Securities in India.
Yesterday’s slide continued this year’s rout, with the Asia-Pacific stock market as a whole down approximately 18 percent since the start of the year.
Shares began sliding last year after a default crisis among “subprime” — or riskier — US mortgages emerged. Banks have lost billions of dollars on investments tied to the mortgages, precipitating a global credit crunch.
Investors are anxiously waiting for results this week from key US financial companies, which could reveal yet more subprime-related losses.
China, which is battling high inflation, is also scheduled to release economic data.
European shares also sank yesterday and investors were braced for more volatility on Wall Street later in the day.
NETWORK-MAPPING PROJECT: The database contains 170 detailed files of Taiwanese politicians and about 23 million records of household registration data in Taiwan China has developed a network-mapping project targeting political figures and parties in Taiwan to monitor public opinion during elections and to craft tailored influence campaigns aimed at dividing Taiwanese society, according to documents leaked by Chinese technology firm GoLaxy (中科天璣). The documents, collected by Taipei-based Doublethink Lab, showed a database was specifically created to gather detailed information on Taiwanese political figures, including their political affiliations, job histories, birthplaces, residences, education, religion and a brief biography about them. Several notable Taiwanese politicians are in the database, including President William Lai (賴清德), former president Tsai Ing-wen (蔡英文), Minister of Foreign Affairs Lin Chia-lung (林佳龍),
KEY INDUSTRY: The vice premier discussed a plan to create a non-red drone supply chain by next year, which has been allocated a budget of more than NT$7.2 billion The government has budgeted NT$44.2 billion (US$1.38 billion) to cultivate Taiwan’s uncrewed aerial vehicle (UAV) industry over the next five years, which would make the nation a major player in the industry’s democratic supply chain in the Asia-Pacific region, Premier Cho Jung-tai (卓榮泰) said yesterday. Cho made the remarks during a visit to the facilities of Cub Elecparts Inc (為升電裝). Democratic Progressive Party (DPP) Legislator Chen Su-yueh (陳素月) and Chinese Nationalist Party (KMT) Legislator Hsieh Yi-fong (謝依鳳) also participated in the trip. Cub Elecparts has transitioned from the automotive industry to the defense industry, which is the top priority among the nation’s
UPGRADED MISSILE: The Chungshan Institute of Science and Technology is reportedly to conduct a live-fire test of the Hsiung Feng III anti-ship missile on Thursday next week The US Army is planning to build new facilities to boost explosives production and strengthen its supply chain, a move aimed at addressing munitions shortages and supporting obligations to partners including Taiwan, Ukraine and Israel, Defense News reported. The army has issued a sources sought notice for a proposed Center of Excellence at the Blue Grass Army Depot in Kentucky, the report said. The facility would serve as a hub within the US industrial base for the production of key military explosives, including research department explosives (RDX) and high melting explosives (HMX), while also supporting research and development of next-generation materials. The proposed
SOUTH KOREA DISPUTE: If Seoul continues to ignore its request, Taiwan would change South Korea’s designation on its arrival cards, the foreign ministry said If South Korea does not reply appropriately to a request to correct Taiwan’s name on its e-Arrival card system before March 31, the government would take corresponding measures to change how South Korea is labeled on the online Taiwan Arrival Card system, the Ministry of Foreign Affairs said yesterday. South Korea’s e-Arrival card system lists Taiwan as “China (Taiwan)” in the “point of departure” and “next destination” fields. Taipei has asked Seoul to change the wording. Since March 1, South Koreans who hold government-issued Alien Resident Certificates (ARC) have been identified as from “South Korea” rather than the “Republic of Korea,” the
RSS