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Tokyo stocks suffer worst crash in two decades

Tokyo stocks suffer worst crash in two decades
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First Published: Wed, Oct 08 2008. 04 27 PM IST
Tokyo: The Tokyo stock market suffered its darkest day since the 1987 stock market crash as the Nikkei dived more than nine percent Wednesday amidst panic-selling over the global financial crisis.
The steep fall reflected a sense of desperation among investors that efforts by global authorities to try to calm the worse financial shock since the Great Depression do not appear to be working.
The Nikkei-225 index dived 952.58 points, or 9.38%, to 9,203.32, a drop that even Prime Minister Taro Aso described as “beyond our imagination.”
It was the third-largest loss in the history of Asia’s largest bourse, surpassing the slump after the 11 September, 2001 attacks on the United States.
The last time the Nikkei fell so much was a 14.9% plunge on 20 October, 1987 in the wake of the “Black Monday” crash in the United States.
“No one wants to take risks right now,” said Hirokazu Fujiki, a strategist with Okasan Securities. “There’s no near-term bottom in sight.”
Reports that auto giant Toyota may miss its earnings forecast added to the market jitters, sending shares in the auto giant down 11.6% to 3,280 yen.
Other exporters also suffered a mauling as the yen soared, dimming the outlook for overseas earnings. Sony dropped 335 yen, or 12.3%, to 2,385.
The Topix index of all first section shares tumbled 78.60 points, or 8.04 %, to 899.01.
The plunge came after Wall Street’s Dow Jones Industrial Average sank more than 500 points or 5% on Tuesday to a five-year closing low.
“The cause of the freefall did not come from within Japan. Investors were simply determined to pull money out from the stock market,” said Daisuke Uno, chief market strategist at Sumitomo Mitsui Banking Corp.
“I think share prices will continue falling,” he warned.
The Nikkei is now at the lowest level in more than five years, having tumbled by more than 30% since the start of August.
It is a whopping 76% lower than its all-time peak of 38,915 points struck in December 1989 before Japan’s economic bubble burst.
The latest plunge came despite new efforts by global policymakers to try to shore up ailing markets.
Uno said that Japan’s central bank, which held interest rates steady a day earlier, appeared to be underestimating the severity of the problems.
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First Published: Wed, Oct 08 2008. 04 27 PM IST
More Topics: Stocks | Japan | Nikkei | Market Crisis | Money Matters |