Asian Shares Tumble After Wall St Fall

Source : The Straits Times, Sep 10, 2007

TOKYO - ASIAN stock markets tumbled on Monday, with exporters hit hard as the dollar slumped to a 15-year low against a basket of major currencies on concerns the United States economy may be heading into a recession.
Data on Friday showing US payrolls shrank in August for the first time in four years suggested that a credit squeeze stemming from problems in the US subprime mortgage market is beginning to stifle growth in Asia's top export market.

Japanese government bond futures leapt to a 19-month high following a rally in US Treasuries on growing expectations that the Federal Reserve may have to slash interest rates next week to support the economy.

'A rate cut by the US Federal Reserve would certainly ease investor concerns and it is increasingly likely that it will happen. But short of that, it is hard to see what the catalyst will be for investors' nerves to be soothed,' said Mr Martin Arnold, an equities economist at CommSec in Sydney.

TOKYO
Japanese share prices fell 2.11 per cent in morning trade on Monday as a surprise fall in US payrolls and a contraction of the Japanese economy weighed heavily on investor sentiment, dealers said.

Exporter shares were particularly hard hit after the dollar slumped against the yen and other currencies as the US job losses raised concerns that the world's largest economy is losing steam.

The Tokyo Stock Exchange's benchmark Nikkei-225 index of leading shares was down 340.49 points at 15,781.67 by the lunch break.

The broader Topix index of all first-section shares lost 30.53 points or 1.96 per cent to 1,526.49.

On Friday in the US, the Dow Jones index lost 1.9 per cent after markets took fright at a drop of 4,000 in payroll jobs in the US economy in August.

'The US employment data reinforced investor uncertainties about the future course of the US economy on top of ongoing worries about subprime loans,' said Mr Katsuhiko Hiroshige, a market analyst at Traders & Co.

Adding to the market gloom, Japan's economy shrank by 0.3 per cent in the three months to June from the previous quarter as firms cut spending on new factories and equipment, the government said ahead of the opening bell.

SHANGHAI
Chinese share prices fell 0.94 per cent in early Monday morning trade, extending previous loss after China's top securities regulator flagged the risks of stock investment, dealers said.

They said that cautionary comments published Monday by Mr Shang Fulin, China's chief security regulator, sparked selling ahead of the release of key monthly economic data this week.

Mr Shang, chairman of China Securities Regulatory Commission, said in commentary published in state media that risks were increasing amid recent strong gains that has pushed the key Shanghai index up 97 per cent since January.

He said that new forms of market irregularities and the weak risk awareness of many investors continued to be problems for China's fledgling but booming stock market.

'The market, which is retreating after recent highs, was psychologically impacted by Mr Shang's remarks,' said Mr Wang Xiaoming, an analyst with Xiangcai Securities.

Investors were also nervous about the release of key data this week that is expected to show inflation is well above the government's comfort zone of 3.0 per cent.

On Friday, the benchmark Shanghai Composite Index closed down 116.48 points, or 2.16 per cent, at 5,277.18, after the central bank announced a seventh hike in bank reserve ratio requirements in an effort to tighten credit.

At 10.26am, the benchmark Shanghai Composite Index, which covers both A and B shares listed on the Shanghai Stock Exchange, was down 49.75 points, or 0.94 per cent, to 5,227.42.

HONG KONG
Hong Kong stocks fell 1.7 per cent in a broad sell-off on Monday, pacing declines in global markets, after the latest US jobs data sparked fears that the world's largest economy could be headed for a recession.

But blue chip Hong Kong Exchanges and Clearing surged more than 7 per cent at the open after the government raised its shareholding in the city's bourse operator.

The benchmark Hang Seng Index opened at 23,584.07.

KUALA LUMPUR
The Kuala Lumpur Composite Index opened down 14.76 points to 1290.14. -- REUTERS, BERNAMA, AFP