Asian markets plunge after Wall Street slide

by Sanjay Jha | October 22, 2008 at 08:47 pm

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Taking cue from US stocks market of Wednesday, Asian stocks tumbled Thursday as fears that the world's biggest economies are shrinking sparked fresh panic, despite continued efforts by several governments to ease the financial crisis and bail out packages. The fresh global recession worries, grim corporate outlooks and falling oil prices have led to this fall.

Similar story were repeated in other emerging markets. With many large US companies posting poor results, fresh fears shivers through financial markets around the world.

ASIAN stocks fell to a 4-year low on Thursday on growing fears a global recession would depress corporate earnings, while the dollar rose to a 2 year high against the euro, underpinned by the unwinding of risky trades.

Investors have mostly sought refuge in government debt of the euro zone, Japan and the United States as well as the yen, after credit market stabilisation in the last week unearthed a renewed focus on the adverse impact of the financial crisis on real economies, especially in emerging markets.
The cost of insurance against sovereign debt default in countries such as South Korea, Indonesia and the Philippines soared, with a sense of panic festering two days after Argentina moved to nationalise its pension system.

The step was interpreted by investors as a desperate measure to stave off default.

Markets in developing countries, especially those that depend on portfolio flows to balance their current accounts, were abandoned overnight, with almost no one spared from a sharp slowdown in the global economy that has pushed crude prices below US$70 (S$105.23) a barrel and dragged copper prices to a three-year low.

The outlook for export-dependent Asian economies darkened, hitting the shares of many high-profile companies that have staked their business on overseas sales, such as Samsung Electronics and Canon.

'After a raft of US earnings came out dismally, companies are set to cut costs, mostly by laying off a significant portion of their employees.

'Worry about massive unemployment and its impact on the real economy is deepening', said SK Securities' Kim Joon Kie, a market analyst in Seoul.

The MSCI index of Asia-Pacific stocks outside Japan fell 5.5 per cent to its lowest since October 2004.

The global emerging markets index was down 3.7 per cent to a near 4-year low, and its 35 per cent drop so far in October outpaced the 25 per cent decline on the all country world index.

Japan's Nikkei share average slumped 5.5 per cent, having now fallen 21 per cent in October alone.

Indian Stocks market plunged at opening session on Thursday. Stocks fell at open after fears of recession and low earnings dragged global equity mkts. Market index Nifty has reached lowest in two year.

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The market has been continued to reel under pressure and has opened sharply lower. The sharp decline in global markets is putting pressure on our markets, as credit concerns have become strong in the emerging markets.

The Nifty has slipped below 3000 mark for the first time since July 2006. It went down by 134 points to 2,931, at 10:00 am. The Sensex lost 450 points to 9,719. BSE Midcap and Small Cap indices lost 2.5-3%.

Reliance Industries, Bharti Airtel, TCS, ONGC, ICICI Bank, NTPC, HDFC, Infosys, BHEL, Reliance Communication and SBI are dragging indices lower.

The BSE Metal, TECK, Realty, IT, Oil & Gas, and Bankex fell 4-6%.

The Indian rupee has depreciated and is inching towards 50 mark. It has touched a low of 49.80 to a dollar.