Stocks tumble across Asia on credit fears

Stocks tumble across Asia on credit fears

Singapore: Asian stocks tumbled on 12 November 2007 after worries over more credit losses at financial firms and a steep fall in crude oil sent shudders through financial markets, bruising technology and energy shares.

Tokyo’s Nikkei dropped more than 2% to its lowest closing level in 15 months as investors dumped exporters on the back of a surge in the yen to an 18-month high versus the dollar.

Fresh concerns about further losses linked to the US subprime mortgage sector were rekindled on 9 November when Wachovia Corp, the fourth-largest US bank, reported a potential $1.7 billion (almost Rs6,700 crore) loss on mortgage-related debt.

HSBC Holdings fell in Hong Kong after the Sunday Telegraph said the bank was expected to reveal a new $1 billion hit in its results this week from its exposure to the US mortgage crisis.

“It’s getting to the point where everything seems scary, and that it’s hard to trust what financial institutions are saying," said a trader for a major Japanese trading house.

Oil issues led losses amid dropping crude prices.

Tokyo’s Nikkei average ended down 2.5% at 15,197.09, after falling below 15,000. MSCI’s measure of other Asia Pacific stocks plumbed seven-week lows, down 3.7% around 0615 GMT.

China’s stock market fell after the central bank tightened monetary policy on 10 November, sending the Shanghai Composite Index down 2.9%.

Battling to restrain growth in money supply and inflation, China’s central bank said it would lift the proportion of deposits that commercial banks must keep in reserve by 0.5 percentage point to a record high of 13.5%.

South Korea’s key KOSPI ended 3.4% lower, Taiwan shares fell 3.4%, Hong Kong’s Hang Seng Index dropped 4.5% and Singapore’s Straits Times Index was off 2.8%.


The fall in Asian markets followed declines on Wall Street, which slid on 9 November (Friday) led by technology stocks after Qualcomm Inc’s disappointing outlook.

Nervousness over widening subprime-related losses and an unwinding of carry trades, in which investors sell low-yielding currencies like the yen and buy higher-yielding currencies, hit the dollar, sending it to a low around 110.10 yen, the lowest level since May 2006.

The dollar also dipped against the yen after Japan’s top government spokesman Nobutaka Machimura said it was wrong to conclude that a high yen was a bad thing for his country since it heightens the value of Japan’s assets.