Picture : Chengdu Stock Exchange in ChinaTOKYO: Asian share prices fell sharply Wednesday as anxiety returned over the health of the US economy, raising new fears of a global credit squeeze, dealers said.
Stock markets in Tokyo, Hong Kong and other key Asian financial capitals were down more than two per cent in early trade, a sharp U-turn for markets that had been stabilising after chaos earlier this month.
The fresh turmoil was triggered by a double whammy of bad news from the United States.
A research group said consumer confidence in the world's largest economy had slipped in August, while minutes released by the Federal Reserve hinted at deeper than expected housing market woes.
"Asian markets were facing selling pressure as most Asian economies are heavily dependent on the US economy," said Hirokazu Fujiki, strategist at Okasan Securities in Tokyo.
"We still need more time to check how badly the sub-prime loan issue is actually affecting consumer sentiment and corporate earnings in the United States," he said.
"The bearish tone is likely to continue on global markets, including Asia, for the time being."
Global markets have taken a beating in recent weeks due to concern about the US sub-prime mortgage market, in which housing loans were extended to borrowers with patchy pasts who are now defaulting.
The market woes have triggered fears of a global liquidity crunch as exposed investors scramble to cover their losses.
The trouble is especially worrisome for Japan, the world's second largest economy, as it maintains super-low interest rates in a monetary policy designed to stimulate the economy and fight deflation.
The turmoil has led to a sharp rise in the yen as dealers dump so-called "carry trades" -- in which they borrowed in Japan to invest in higher-yielding markets.
The Tokyo Stock Exchange's benchmark Nikkei-225 index was down 2.6 per cent in morning trade Wednesday, dipping below the symbolic 16,000-point level for the first time in a week.
Video game maker Nintendo, which is particularly sensitive to prices of its products overseas, nosedived 3,200 yen or 5.90 percent in the morning session to 51,000 yen.
Hong Kong share prices fell 2.20 per cent in early trade, Singapore was down 2.55 per cent and Jakarta tumbled 3.20 per cent.
"Looks like the problems are getting deeper than first anticipated," Fraser Securities research head Najeeb Jarhom said in Singapore.
Seoul opened 2.15 per cent softer before slightly rebounding.
"The market is being swayed by external leads like fresh worries over the troubled US subprime mortgage market," SK Securities analyst Won Jong-Hyuck said.
Australian shares were down 1.69 percent, with banking stocks taking a particular bruising.
"Every time we say we should buy on dips but when we get the dips it looks scary -- we don't buy even though there's reason to," Bell Potter Securities private client advisor Stuart Smith said, adding that economic fundamentals were still strong.
The Chinese market, which has weathered the sub-prime crisis better than most regional bourses, was down only modestly in early trade amid concern that the domestic issue of an initial 80 billion dollars would drain liquidity. - AFP/ac
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