A massive sell-off on Wall Street and escalating fears of a global recession sent Asian stocks plunging today, with Japan's benchmark index plunging more than 10 per cent. "Selling is unstoppable in New York and Tokyo," said Yutaka Miura, senior strategist at Shinko Securities Co. Ltd. in Tokyo. "Investors were gripped by fear."
Markets in Hong Kong, Australia, South Korea, Thailand and the Philippines were all down more than 7 percent. Shanghai's index was down 3.8 percent.
Indonesian authorities suspended trading indefinitely on the Jakarta Stock Exchange after they had halted trading Wednesday after the index plunged more than 10 percent.
In Tokyo, news of Friday's developments left individual investors shellshocked.
Kenji Akasaka, 69, president of a local printing company, said he had never seen it this bad in the 40 years he has traded stocks. He said he invests mainly in blue-chips including Toyota Motor Corp. and Nintendo Co.
"I pray before I go to bed that the Dow will recover," said Akasaka, 69, as he scanned a monitor displaying the latest market levels. "I get sleepless, thinking about losses." Japan's benchmark Nikkei 225 stock average plummeted 10.3 percent to 8,217.50 in early afternoon trading and appeared headed for its second biggest one-day loss ever. The Tokyo bourse and the Osaka Securities Exchange briefly suspended some futures and options trading during the morning.
The regional sell-off follow a 7.3 percent plunge in the Dow Jones industrial average Thursday to close below the 9,000-line for the first time in five years. Stocks nose-dived after a major credit-rating agency said it might cut its rating on General Motors Corp. and Ford Motor Co., further rattling investors already fretting over the impact of tight credit on the economy. The Dow's seven-day decline of 20.9 percent is the largest since the seven-day plunge ending Oct. 26, 1987, when the Dow lost 23.8 percent. That sell-off included Black Monday, the Oct. 19, 1987 market crash that saw the Dow fall nearly 23 percent in a single day.
The sluggishness in the credit markets that triggered much of the heavy selling in markets around the world since mid-September appeared little changed even after a string of interest rate cuts by central banks in the U.S., Europe and Asia this week in an attempt to resuscitate lending.
"There's no bottom to the stock markets now," said Francis Lun, general manager at Fulbright Securities Ltd. in Hong Kong. There's no clue when it will stop."
Analysts also said there's pressing need for the U.S. to quickly implement the US$700 billion plan to buy up toxic mortgage-related securities from troubled banks and financial institutions that are at the core of problem.
In Japan, insolvencies in the insurance and real estate sectors accelerated the pessimism.
Mid-sized Yamato Life Insurance Co. went bankrupt Friday on losses related to global stock woes, while New City Investment Corp.'s bankruptcy filing made it Japan's first real-estate investment trust to fail.
Japanese Economy Minister Kaoru Yosano sought to reassure the country even as markets tumbled.
"We need to make sure that we don't get pulled too much by global tides," Yosano said. "I hope investors Japan's makes decisions calmly based on Japan's economic fundamentals." Lucinda Chan, associate director of Macquarie Equities in Sydney, called the market moves "ghastly."
"It is a very different and very unprecedented climate at the moment," she said. "Growth is going to be a major concern in this market and that is why the Australian market is getting a very hard pinch because we are a commodity export nation." Asia's falls come as finance ministers and central bankers from the Group of Seven industrialized nations prepared to meet later Friday in Washington.
"Investors are not so sure that the G7 will announce effective measures to contain the global financial crisis," Miura in Tokyo said.
In currencies, the dollar fell to 98.69 yen Friday afternoon Asia from 98.82 yen late Thursday. The euro stood at US$1.3548 from US$1.3560.
Associated Press writers Shino Yuasa in Tokyo, Zakki Hakim in Jakarata, Indonesia, Dikky Sinn in Hong Kong contributed to this report.