For the second week running, Asian markets lost their midweek luster on Friday as the region's indices ended sharply down on concerns about a strong yen and a weak U.S. economy.
The Hang Seng was the biggest decliner, tumbling 1,137 points, or 3.95%, to 27,614.
Elsewhere, markets traded within a volatile but downward band. In China, the Shanghai Composite Index lost 49 points, or 0.91%, to 5316, while Tokyo's Nikkei slipped 241 points, or 1.57%, to 15,154. The South Korean Kospi finished 21 points lower, down 1%, at 1926.
"This kind of volatility will remain especially in the Shanghai market. We haven't seen the worst of financial problems yet," says Serdar Kucukakin, emerging Asia economist for ABN Amro.
In Hong Kong, property stocks, which have previously been the most resilient to recent selloffs, lost the most in a single trading session this month.
Cheung Kong Holdings
dived 4.77% to HK$137.70, while
Sun Hung Kai Properties
lost 3% to HK$11.64 and 4.25% to HK$88.15, respectively.
Among telecom names,
fell 4.6% to HK$133.20, while
slipped slightly, by 0.78% to HK$15.26, and
sank 2.4% to HK$20.05.
In oil and gas stocks,
fell 4.5%, to 14.60, and in China,
Sinopec Shanghai Petrochemical
lost 0.81%, to 9.81 yuan.
On the mainland, a state news program caused a furor in the currency markets, advising retail speculators to "sell the dollar," and telling viewers specifically that "selling dollar for yuan as soon as possible may be a safe approach," according to local journalists.
The yuan was strengthening to 7.4235 from 7.427 vs. the dollar in Asian trading. In Japan, the yen was trading up at 110.54 vs. the dollar.
As a result of the strong yen, Japanese exporters lost broadly.
fell 1.1% to 5,350 yen, while
shed 1.25% to 5,500 yen, and
plummeted 4.7% to 61,000 yen.
Despite the strengthening yen, which decreases margin on sales, many bargain hunters in Asia are now looking at Nintendo as a buy. The stock has declined from a year's high of 73,200 yen in recent weeks, and Nintendo bulls expect an increase in production of the Wii in December, for Christmas and the New Year.
U.S. video game sales totaled $1.1 billion in October, compared with $643 million a year earlier, with the Wii the top-selling console, according to
. The business news station reported Nintendo as "scrambling to produce enough units to meet demand."
In Korea, steelmaker
lost 1.36%, while
fared better, down just 0.56%. For the Korean bank, that's still 22% off this year's high, reached in June, and southeast Asian money managers -- in particular those in Singapore -- now see the stock as a buy, since it is insulated from subprime exposure.
ABN Amro's Kucukakin says that while there will be an uptrend in Asian markets going into the end of the year, investors should be wary of volatility as external factors like a weak dollar, a high oil prices and subprime exposure continue to destabilize the bull run in equities.
"I maintain the view that it will bumpy. We had this discussion in March, we have had it in May, and we have it now -- there will be corrections over and over again," says Kucukakin.
Daniel M. Harrison is a business journalist specialising in European and emerging markets, in particular Asia. He has an MBA from BI, Norway and a blog at
. He lives in New York.