Hong Kong: Asian markets fell sharply on Tuesday on Wall Street’s weakness, with anxiety over US housing and financial sectors deepening after investment bank Merrill Lynch and Co. Inc. announced a $5.7 billion (Rs243.5 billion) loss from bad debt. A disappointing Toyota Motor Corp. forecast also weighed on Japanese shares.
In Tokyo, the Nikkei index 225 lost 1.5% to close at 13,159.45 points, and every major benchmark in the region closed down. European markets opened mostly lower as well, with Britain’s FTSE 100 virtually flat, Germany’s DAX down 0.8%, and France’s CAC 40 losing 1.3%.
Throughout Asia, investors were distressed after Wall Street fell back into bear territory overnight, hit with more worries that decaying US housing and credit markets will cause the world’s largest economy—a major importer of Asian-made goods—to slow down.
The International Monetary Fund (IMF) added to some of those fears with a report saying that “a bottom for the (American) housing market is not visible.” And Merrill Lynch’s massive write-down, booked from selling off risky mortgage securities and hedging contracts, was yet more evidence of the prevailing financial troubles. There were also problems closer to home.
Merrill’s news came a day after Australia and New Zealand Banking Group Ltd, the country’s fourth-largest bank, announced a $1.1 billion provision charge for bad debts and other write-offs.
“The credit crunch is still biting,” said Garry Evans, pan-Asian equity strategist with HSBC Holdings Plc. in Hong Kong. “That raises risk aversion and worries of a sharp slowdown in the US.”
Hong Kong’s blue-chip Hang Sang index shed 1.9% to 22,258, posting its fourth straight day of losses.
Indian and Taiwan measures tanked 4% and 3%, respectively. And Shanghai, South Korea, Australia markets were off just under 2%.In Japan, the market swooned after Toyota said on Monday that it was lowering its global vehicle sales plan for this year to 9.5 million vehicles—down from 9.85 million—as the sluggish North American market slows the Japanese automaker’s momentum.
Toyota fell 2.7% in Tuesday trade, with its rival Honda Motor Co. Ltd declining 2.2%.
Investors in Japan largely stayed on the sidelines ahead of the release of earnings results from major Japanese companies during the week, analysts said.
After the market’s close, Sony Corp. reported a 50% plunge in April-June profit, due partly to a stronger yen that eroded sales. The electronics and entertainment company shed 3.2% before the announcement.
In Hong Kong, banks, airlines and exporters saw heavy selling. Financials issues such as Standard Chartered Plc., down 4.4%, and HSBC, off 3%, were beaten down on souring sentiment about the sector. Companies dependent on overseas markets lost ground as investors worried about US demand, with retail goods and textile exporter Li and Fung Ltd plummeting 5.4%.
Carrier Cathay Pacific Airways Ltd retreated 2% as oil prices firmed. Mainland China investors were left skittish by Wall Street’s performance.
The benchmark Shanghai Composite index fell 1.8% to 2,850.31. The Shenzhen Composite index lost 1.5% to 855.84 points.