Tokyo: Japan’s Nikkei average fell more than 5% to a 28-month low on Tuesday as Asian markets extended losses on growing fears of a US recession, with banking giant Mizuho Financial Group down more than 6%.
The yen remained strong against the dollar, beating already weak exporters.
“It’s like a funeral in here,” said Ken Masuda, senior equities dealer at Shinko Securities, as the Nikkei share average took its losses to 17% so far this year and 30% over the last six months.
“No one knows what is going to happen tonight in New York. It’s like we’ve gone blind — you don’t know what’s coming. Until we see New York, all we can do is sell.”
Trade on the main bourse of Korea’s stock exchange was halted for five minutes and Indian stock trading was halted after steep falls, both helping to push the Nikkei lower.
MSCI’s index of Asian shares besides Japan was down 7.3% at 0457 GMT.
“Everyone’s watching Asia right now, especially Hong Kong, which is now down 8%,” said Mitsushige Akino, Chief Fund Manager at Ichiyoshi Investment Management.
“Financial shares are hit pretty hard, since fears are growing that the US is heading for a recession and this recession has been caused largely by the whole subprime mortgage mess.”
At 0451 GMT the Nikkei was down 4.7% at 12,701.31 points, its lowest since early September 2005. The broader TOPIX was down 4.6% at 1,234.82.
Pessimism extended throughout the Japanese market, from large institutional investors to the nation’s legions of individual investors. “It’s kind of creepy. It feels like we’re in a bottomless swamp,” Junichi Nakajima, a retired 69-year-old, said as he anxiously watched a big screen showing tumbling indices.
“No one really understands the scale and content of the subprime loans. The Japanese financial institutions are saying there were some losses, but I think everyone, including myself, is thinking that perhaps there may be more damage.”
US stock index futures sank in holiday-shortened trading in New York on Monday, indicating Wall Street was likely to join the market plunge when trading resumes on Tuesday, although market players said that falls there could spark emergency measures from the US government to halt the global slide.