Asian Shares Tumble, STI Plunges In Biggest 1-Day Fall In 6 years

Source : The Straits Times, Aug 16, 2007

ASIAN stock markets endured one of their most brutal selloffs in recent years with dramatic falls of more than five per cent on some bourses as the fallout from US mortgage woes escalated.

Singapore shares dived more than five per cent on Thursday, their sharpest one-day drop since Sept 2001.

Investors here continued to dump financial stocks such as DBS and Singapore Exchange on fears of a credit squeeze.

Asian markets buckled under a wave of selling as the growing fallout from turmoil in US credit markets prompted investors to flee to safe havens such as bonds.

From Tokyo to Sydney, Hong Kong to Mumbai, weary stock dealers' screens were awash with red again as fears over problems in US subprime mortgages to high-risk borrowers continued to buffet stock markets around the world.

The benchmark Straits Times Index fell as much as 5.16 per cent, its biggest percentage drop in one day since Sept 21, 2001.

The index pared its losses by the close, ending down 3.7 per cent, or 121.09 points, at 3,152.16.

'It's horrible. People can't believe this is happening. A triple-digit fall for two days in a row smacks of a mini crash,' said Najeeb Jarhom, research head at Fraser Securities.

The STI had dropped 3.35 per cent, or 113.34 points, on Wednesday, and has slumped 14.5 per cent from a record high of 3,688.58 on July 16. The index is up 5.6 per cent since January.

Asian markets

But in some markets stocks managed to recover ground in late trade.

Tokyo's Nikkei-225 index fell below the key 16,000-point level for the first time since November before clawing back to end down 1.99 per cent.

Hong Kong tumbled 3.3 per cent.

Jakarta stocks fell as much as 8.2 per cent - their sharpest one-day loss since October 2002 - before ending down 5.94 per cent.

Malaysian shares dropped 3.5 per cent to a near five-month low.

Philippine stocks dropped 6 per cent to a seven-month low, Thai shares were off 2.8 percent, and Vietnam's main stock index fell 1.65 percent.

Financial and blue chip stocks with large foreign holdings - which have led losses in regional markets in the past three weeks - continued to bear the brunt of Thursday's sell-off.

Fallout

Singapore's DBS Group Holdings, South-east Asia's biggest lender, dropped 3 per cent. United Overseas Bank fell 4.8 per cent, and Oversea-Chinese Banking Corp dropped 4.2 per cent.

Singapore Exchange, Asia's third-largest listed bourse, slid 7.8 per cent to its lowest in more than two months on investor fears that its profits would be hit by shrinking trading volumes amid volatile markets.

Although most regional markets are oversold at current levels, some investors said it is not yet time to buy because markets may fall further on uncertainty over the extent of the fallout from US subprime mortgage problems.

The 10-day Relative Strength Indexes for the Singapore, Malaysian, Thai, Philippine and Indonesian markets are well below the 30-point level, indicating that markets are oversold.

In Malaysia, Bumiputra-Commerce Holdings, the country's second-largest bank, fell 1 per cent. -- REUTERS