Asian Stocks Tumble On Worries Over US Economy

Source : The Straits Times, Aug 29, 2007

Investors dumped risky assets on Wednesday on renewed fears about the health of the US economy, Asia's top export market, sending regional stocks down and driving the yen and safe-haven government bonds higher.

'The main worry for us about the ongoing US subprime crisis is really the impact on the US consumer,' said Choo Hee-yeop, deputy general manager of asset management strategy at Korea Investment and Securities.

'Falling consumer sentiment there is a big concern, and it's going to inevitable hit shares in exporters such as autos.'

SINGAPORE
Shares fell sharply on Wednesday morning after US stocks tumbled overnight on worries over the health of the American economy.

The benchmark Straits Times Index lost 73.80 points or 2.2 per cent to 3,269.20 at 12.30pm, tracking falls in key regional markets.

In the broader market, losers beat gainers 659 to 127 in a turnover of 1,092.7 million shares.

KUALA LUMPUR
Malaysian stocks fell with the key Kuala Lumpur Composite Index down 22.77 points to 1,256.18 at the lunch break.

Losers outperformed gainers 786 to 51 while 114 counters were unchanged. Turnover was at 543.2 million valued at RM981.5 million (S$431.8 million).

HONG KONG
Blue chips fell 2.3 per cent as sliding global equities amid heightening credit worries prompted investors to cash in recent gainers like heavyweight China Life.

Hong Kong-listed shares in mainland companies, or H shares, tumbled 4.1 per cent.

Aluminum Corp of China, Jiangxi Copper Co Ltd and other China plays which had rallied in recent sessions on anticipation that their wide discounts to Shanghai-traded A-share counterparts would attract an influx of mainland investors.

Mainlanders last week were given the green light to invest directly in Hong Kong stocks.

'It's pretty much the usual stuff,' said Jackson Wong, investment manager at Tanrich Securities.

'The A-H discount shares are all down, but I think there's still buying power. The (mainland investment) scheme is a huge catalyst for these stocks to hold up.'

The benchmark Hang Seng Index fell 544.19 points to 22,819.57 by lunch. The China Enterprises Index of Hong Kong-listed mainland companies had shed 572.42 points to 13,377.23.

Mainboard turnover slowed to HK$59.4 billion (S$11.6 billion), down sharply from Tuesday morning's HK$75.9 billion.

SHANGHAI
Chinese stocks fell sharply on Wednesday, dragged down by a sharp drop in the Hong Kong share market and concern that domestic money market liquidity might tighten in coming months.

The Shanghai Composite Index ended the morning down 1.91 per cent at 5,095.294, after dropping as much as 2.53 per cent at one stage. Falling Shanghai stocks outnumbered gainers by 645 to 205.

Turnover in Shanghai A shares remained active at 91.3 billion yuan (S$18.5 billion), up from Tuesday's 89.1 billion yuan, showing considerable interest in taking profits on the index's gain of more than 90 per cent this year.

'After the index touched 5,200 points and rose for seven straight days, it's time to pull back. Investors are getting nore cautious,' said Zhang Qi, analyst at Haitong Securities, noting that articles in major business newspapers had started warning more of risks in the market.

Some traders think the index will probably pull back in coming days to technical support around 4,900, where it briefly peaked in mid-August, although cash-flush mutual funds are expected to prevent any steep or extended slide.

TOKYO
Japanese stocks slid nearly three per cent on Wednesday as a strong yen sparked sales of exporters such as Sony Corp after worries about the US economy set off a Wall Street tumble, but later recouped some losses.

A few shares, such as Isuzu Motors Ltd, bucked the trend, largely due to individual factors - in the case of Isuzu, upbeat mid-term financial targets - as a wait-and-see mood spread out of concern about yen movements.

The benchmark Nikkei average lost 274.66 points or 1.69 per cent to 16,012.83, while the broad Topix index fell 1.71 per cent to 1,557.55. -- REUTERS