Asian stocks tumble as crisis grips more US financial firms

Asian stocks tumble as crisis grips more US financial firms
AFP
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First Published: Mon, Sep 15 2008. 11 29 PM IST
Updated: Mon, Sep 15 2008. 11 29 PM IST
Hong Kong: Markets across Asia tumbled on Monday on new fears over the state of the global financial system as Wall Street giant Lehman Brothers Holdings Inc. said it would file for bankruptcy.
Taiwan was the worst hit among the major markets, closing down 4.09%, while Singapore shed 3.27%. However, in Australia, dealers fought back slightly from earlier losses to end the day off 1.8%. But the worst hit of Asia’s bourses was Jakarta, which was 4.7% off, while Manila shed 4.2%. Tokyo, Hong Kong, Shanghai and Seoul were closed for public holidays.
The financial sector suffered most as investment bank Lehman Brothers, hit hard by the US subprime real estate meltdown, staged a last-ditch effort to find a buyer. When it failed, it announced that it would file for bankruptcy “in order to protect its assets and maximize value”.
The US Federal Reserve and major global banks opened up fresh credit as markets braced for its collapse, with many fearing a domino effect that would ravage the rest of the global financial system.
In the fallout, Bank of America Corp. took over Merrill Lynch and Co. in a $50 billion (Rs2.3 trillion) deal, insurance giant American International Group Inc. (AIG) was reported to have sought an emergency loan to head off its own crisis and a group of banks set up a $70 billion global emergency fund. “Obviously, with Lehman looking to file for bankruptcy protection, Bank of America buying Merrill Lynch and AIG under pressure to sell assets, you’ve probably seen more in one day of financial history than we’ve seen since the great crash of 1929,” Marcus Droga, associate director of Macquarie Private Wealth, a division of the Macquarie Group Ltd, told Dow Jones Newswires.
In other markets, Wellington shares slid 1.26%, Bangkok was off 1.83%, Kuala Lumpur lost 1.2% and Mumbai was 3.35% down after opening 5.19% off.
Australia’s benchmark SP/ASX200 index closed down 86.1 points at 4,817.7, led by heavy losses in the financial sector, while the broader All Ordinaries dropped 82.1 points to end the day at 4,875.
Singapore’s blue-chip Straits Times Index skidded 84.12 points to 2,486.55. “The market is terrible. The best is to stay away,” a local house dealer said.
Malaysian share prices ended 1.2% lower, dealers said. The Kuala Lumpur Composite Index shed 12.40 points, to close at 1,031.63.
Indonesian shares slumped 4.7% and the Jakarta Composite Index tumbled 84.81 points to its lowest closing level since March 2007 to 1,719.25. PT Bank Mandiri (Persero) Tbk fell 8.2%.
The Philippine composite index fell 109.96 points to 2,536.16, its lowest level in six weeks. In New Zealand, share prices fell by 1.26% and the country’s benchmark NZX-50 index fell 41.78 points to 3,319.90.
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First Published: Mon, Sep 15 2008. 11 29 PM IST