Asian markets began the last full trading week before Christmas deep in the red, as indices throughout the region sold off sharply with investors continuing to ease their holdings ahead of the New Year and global credit concerns causing worry.
In Hong Kong, the Hang Seng plunged 967 points, or 3.5%, to 26,596, giving away nearly all of its gains for the month, while in China, the Shanghai Composite Index lost 126 points, or 2.5%, to 4881. In India, the Bombay Sensitive Index fell the furthest, by 769 points, or 3.8%, to 19,261, in the second-biggest point decline to date.
"No one wants to do anything now, and that's logical. Why would anyone?" says John Koh, a director at MEAG in Hong Kong. "We closed our books a few weeks ago because we didn't want to take further risk in the market."
lost 1.7% to 1,728 rupees, while
shed 2.9% to 1,206 rupees.
fell between 1.5% and 2.1% in late trading, as shares tracked other Asian losses.
In Japan, the Nikkei sank 265 points, or 1.7%, to 15,249, as Japan's three megbanks were reported to be reluctant to provide a requested $15 billion in funds to a U.S. subprime rescue fund.
Despite acknowledging that they are affected by subprime-related losses, the big banks,
Sumitomo Mitsui Financial
feel that they are being asked to shoulder too large a portion of the $60 billion fund set up by U.S. counterparts
Bank of America
, according to local reports.
Mitsubishi UFJ tumbled 4.3% to 1,028 yen, while Mizuho Financial plunged 5%, to 533,000 yen, and Sumitomo Mitsui Financial slipped 1.7%, to 643 yen, in Japanese trading.
Hong Kong financials also dipped deep into the red after the bearish Japanese performance, and as investors mulled comments made by Joseph Yam, chief executive of Hong Kong's central bank late last week, about credit risk on the island. Financial and property stocks were also hit by concern that the
may discontinue a policy of easing interest rates.
Hang Seng Bank
dived 4.5% to HK$146.10, while
fell 2.1% to HK$130.80.
Among property stocks,
Hang Lung Properties
was one of the day's biggest regional fallers, shedding 6.7% to HK$32.25.
dropped 5.7% to HK$131.90,
Sun Hung Kai
lost 4.95% to HK$9.98, and
lost 2.7%, to HK$86.80.
Still, some dealers said they were using the day's dips to buy heavily into Hutchison and Hang Lung Properties, after the
South China Morning Post
reported that secondary market property transactions, or property resales, are set to soar to a 10-year high in December after local interest rate cuts of 2% in November.
Sun Hung Kai also announced that it will raise its Chinese mainland investment to 30% in 2008, from 17% this year, and that it will join with a local partner to develop a 4 billion yuan, or $542 million, project in Suzhou, in the south of China.
"The question investors are asking is, 'are we going into a recession period, or just one quarter?'" says MEAG's Koh. And even in the event of a U.S. recession, Koh adds that it may not be a significant negative for Asian equity prices. "Japan has been in a recession for so many years already, and still companies continue to show profits. There is no growth, but the market isn't that bad. Life goes on."
In other Asian trading, Hong Kong telecoms continued to decline for the fourth straight day, with the biggest losers being
, off 3.9% to HK$5.50 and 2.8% to HK$133.40, respectively.
Japanese exporters declined weakly, as
declined between 0.3% and 0.5%.
fell 1.07% to 64,300 yen after the company announced it could not meet seasonal demand, and would offer a "raincheck" deal to shoppers at
The deal promises consumers who pay now a version of the highly sought-after Wii console sometime in January. Despite strong demand, the company's messy handling of holiday-season orders is seen as a negative by investors.
The yen weakened slightly against the dollar to 113.38 in Asian trading.
The South Korean Kospi ended down 55 points, or 2.9%, to 1839, while the Taiex in Taiwan lost 287 points, or 3.5%, to 7830.
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.