Asian Markets Update: Stocks Across Asia Plunge

The Nikkei suffers its worst intraday fall in a decade, with carnage among Net stocks and blue-chips alike in Korea and Hong Kong.
Author:
Publish date:

TOKYO -- There's nothing like a nice punch in the stomach to start your week.

With a free fall in U.S. equities that saw the

Dow Jones Industrial Average

drop 5.6% and the

Nasdaq Composite

9.7%, could Asia have expected anything other than plunging prices on Monday? Most Asian bourses opened way down and remained in that condition, amid fast, furious and unforgiving trading.

By the end of the day in Tokyo, after the

Nikkei 225's

largest intraday point loss in a decade, some buying did emerge from local institutional investors, and eased some of the pressure. But more of the same declines could be in store tomorrow if American markets slide further in a few hours' time.

As it happens, the outlook for U.S. markets isn't exactly rosy.

S&P 500 futures traded on the

Globex

are down 7.7 points to 1359.8, off an earlier low of 20 points down. Traders like to keep an eye on the S&P futures contract to gauge the market's sentiment on how U.S. equities will perform the next day.

The key

Nikkei 225

index fell 1,426.04, or 7.0%, to 19,008.64, while the

Topix

index, which includes all shares listed on the

Tokyo Stock Exchange's

first section, tumbled 101.24, or 6.1%, to 1552.46. The

Jasdaq

small-cap index shed 10.57, or 12.1%, to 76.64, while the Nikkei

over-the-counter

market lost 191.48, or 10.2%, to 1689.34.

Foreign investors were the first to be blamed in Japan for the dumping of technology stocks. Many traders said the foreign selling had been going on for four straight weeks and is expected to continue until traders make up for some of their losses in the U.S. markets.

"We need cash," said one equity trader from a U.S. house in Tokyo. "The market was a little panicked but it could be worse. I'm more worried about Korea and Hong Kong, where there's a lot more day- and online traders that will get killed as margins are called. In the region, I think Japan will be the first to stabilize."

Yet foreigners are not the only investors doing the damage. Domestic fund managers with index-tracking funds were also keen sellers, since today was the first day money managers got a chance to trade since the key Nikkei 225 index was revamped Saturday. With 30 new stocks to be included in the index starting April 24, mostly in the high-tech sector, fund managers were busy

reshuffling their portfolios today.

The selling in Tokyo subsided when the Nikkei neared its 200-day moving average of 18,500. Experts -- all very quick to note that the performance of Japanese equities will depend on how the U.S. reacts later today -- say the initial blow is over and the market could see some buying when the Topix hits 1520 and the Nikkei 225 is at 18,000.

"I didn't think we'd go down like this but the 'shock-selling' is over," said Toshio Sumitani, strategist at

Tokyo Securities

. "Even though some domestic investors are scared stiff, that leaves those investors that have experienced the worst and they'll know what to do."

NEC

(NIPNY)

lost 10.8%,

NTT DoCoMo

(NMCNY)

shed 10.1% and

Advantest

fell 6.7%, while

Yahoo! Japan

tumbled 12.5%.

Softbank

and

Hikari Tsushin

did not trade due to a wide imbalance of bids and offers.

Sony

(SNE) - Get Report

fell 9.3%. Shares were also hit as local reports said the firm's

PlayStation2

game console may not hit overseas markets as planned this year. The console reportedly holds technology similar to those found in missile guidance systems, and would thus need a special license before the games are shipped overseas.

Among rising stocks,

Kao

was up 1.2%, and

Matsushita Electric Works

(MSEWY)

climbed 3.5%. The former is being introduced into the Nikkei 225 while the latter is favored among investors due to its growth potential in the mobile phone market.

Meanwhile, the rise in the yen against the greenback was also disturbing for investors in export-oriented stocks. The dollar fell more than 2 yen when officials from the

Group of Seven

, who met amid marching protesters in Washington, D.C., this weekend, did not mention the need for a weaker yen. Japanese exporters would like to see the yen weaken since a strong currency makes their products more expensive overseas, thus cutting off major profits as consumers seek out cheaper products. The dollar stood recently at around 103.65 yen.

Hong Kong's

Hang Seng

index closed down 1380.39 points, or 8.6%, to 14,762.37, pulled down by index heavyweights, but traders here also said the panic selling had subsided.

China Telecom

(CHL) - Get Report

was off by 15.6%, while

Hutchison Whampoa

(HUWHY)

fell 12.2%.

HSBC

(HBC)

, although falling 2.0%, was considered a safe haven by investors today as Internet shares such as

Pacific Century CyberWorks

plunged 15.0%.

Korea's

Kospi

index, which fell 93.17, or 11.6%, to 707.72, was the worst performer in Asia. The index broke two records in one day: its worst-ever point drop and its worst-ever percentage drop. With almost 40% of market volume coming from online traders and daytraders, Korean markets were hit hard as investors received margin calls, traders said.

Samung Electronics

, a favorite of foreign investors, fell 11.8%.

In Taiwan, where stocks were traded on Saturday and fell more than 5.0%, the

Weighted Index

was the only Asian market to rise today, gaining 126.88, or 1.4%, to 8993.68.

Singapore's

Straits Times

index was down nearly 9.0%, while Australia's

All Ordinaries

index closed down 5.7%.