Business | Markets
Asian stocks plunge as credit crisis panic sets in
Asian stock markets, led by Japan, plunge as panic sets in after global efforts fail to curb the credit crisis.
- Agencies
- Published: 09:46 October 10, 2008
- Image Credit: Gulf News Archive
- Extreme market volatility stoked talk that the major central banks would have to reduce interest rates again, just days after cuts led by the Federal Reserve and European Central Bank.
Hon Kong: Asian stock markets plunged on Friday as panic set in after global efforts failed to curb the credit crisis.
Japan's Nikkei stock average dived 9.6 per cent, its biggest one-day loss since the 1987 stock market crash.
The MSCI index of Asia-Pacific stocks excluding Japan was down 7.7 per cent to its lowest since January 2005, and has fallen 21 per cent this week alone.
Hong Kong's Hang Seng index dropped 7 per cent to a near three-year low, while Singapore's Straits Times index fell more than 6.6 per cent.
"It's impossible to predict the bottom, and technical analysis is meaningless as panic and fear overwhelm the markets," said Jang Huh, managing director at Prudential Asset Management in Seoul.
Extreme market volatility stoked talk that the major central banks would have to reduce interest rates again, just days after cuts led by the Federal Reserve and European Central Bank.
Investors were also doubtful that a meeting of the Group of Seven rich nations later on Friday could achieve much, with fears growing that the global economy is headed towards recession.
Credit markets were nearly broken. The cost of protection against defaults in Asia's sovereign and corporate debt soared to record highs, traders said.
There were also reports the US Treasury was under intense pressure to inject funds directly into commercial banks.
"It highlights the enormity of the issue and the problem faced by the G7," said Adam Carr, a senior economist at broker ICAP in Sydney. "Given the muted response in markets, certainly I think more rate cuts are to come, as ineffective as they are proving. Let's hope the G7 propose a good dose of fiscal medicine to the real economy as well."
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