VARIOUS: Markets across Asia crash amid fears of a global credit squeeze

Markets across Asia crash amid fears of a global credit squeeze, with South Korea's stock exchange falling the most at almost seven percent. Asian stocks tumbled on Thursday (August 16), heading for their biggest daily fall since the terrorist attacks on the United States in Sept. 2001, as persistent fears about a global credit squeeze sapped investor appetite for risky assets. The yen jumped to five-month highs as currency carry trades were unwound, while emerging market bonds, stocks and currencies were dumped in favour of safe-haven government bonds amid worries about spreading U.S. subprime mortgage problems. Seoul shares fell 6.93 percent on Thursday (August 16), barely skidding off a trail that would have made the fall the biggest since June 2002. Market corrections caused exporters such as Samsung Electronics and financials to fall, routed by worries about global credit. The benchmark Korea Composite Stock Price Index (KOSPI) closed down to 1691.98 points, after earlier hitting its lowest intraday level since May The falls were made more severe as financial markets were closed on Wednesday (August 15) for a public holiday, missing part of a slump in Wall Street amid fears a U.S. mortgage sector crisis could affect the wider credit markets and crimp economic growth. Since hitting a record 2,015.48 points on July 26, the KOSPI has now dropped 16 percent, wiping out 129.9 trillion won (139.4 billion U.S. dollars) in market value, though the main index is still up 18.5 percent for the year. Hong Kong's benchmark Hang Seng Index also fell more than four percent to 20472.02 points, as stocks across the board were caught up in a heavy sell-off. "I'm afraid we are going to go from boom to bust in the global economy and the region that is most exposed to demand from the global economy is Asia. So by this time next year, I think we will be looking at much weaker growth and some major problems in some of the economies in the region, particularly China," said Jim Walker, chief economist at CLSA. Japan's Nikkei share average fell almost two percent, breaking below the 16,000 point for the first time since November 2006, but rebounding back and closing at 16148.49 points. The Nikkei's drop wiped out gains for this year. Taiwan shares fell 4.56 percent to their lowest close in 2-½ months on Thursday, posting their largest one-day drop in more than three years. The main TAIEX share index ended 391.67 points lower at 8,201.37, its lowest close since May 31. During the session, it fell as low as 8,166.08.

ITN Source | August 16, 2007

Tags:. .value. .crisis. .affect. .worries. .investor