Hell in Asia
Panic attack as investors sell off shares at any price
By Kwan Weng Kin & Lee Su Shyan
ASIAN markets had a panic attack yesterday on fears that the financial crisis was fast resembling a runaway train that no amount of intervention could stop.
Investors across the region sold off shares at any price as they rushed for the exits, echoing the sort of alarm last seen during the Asian financial crisis and the 1987 Black Monday crash.
Japanese Prime Minister Taro Aso caught the mood: ‘(The market plunge) is not normal. Frankly, it is beyond our imagination. We have huge fears going ahead.’
The feel-good effect of the 100 basis point interest rate cut in Australia on Tuesday had well dissipated.
Nothing seemed to ease the sense of fear, not big interest rate cuts, not even Britain’s £50 billion (S$127 billion) bank rescue. Singapore’s Straits Times Index (STI) registered its largest drop in percentage terms - 6.61 per cent - since April 2000 and lost 143.94 points.
The STI lost about 50 points in the morning, but remisier Desmond Leong said it was anticipated: ‘It dropped in an orderly fashion, in line with expectations after the Dow fell (5 per cent on Tuesday) and the Hang Seng was coming off.’
But dealers had to hang onto their seats for the afternoon ride.
‘We heard during lunch that the Nikkei had crashed, so we all rushed back,’ said Mr Leong.
Between 3pm and 4pm, the STI fell almost 100 points, or close to 5 per cent.
Mr Leong said: ‘You could feel the fear when you looked at the screen. No one bothered to queue. People were just throwing shares like Noble Group, not waiting to see if there were any buyers. They were taking any price.’
Commodity player Noble lost 13 per cent, or 13 cents, to close at 88 cents.
The STI had a tiny lift towards the end, rising about eight points to close at 2,033.61.
It was even worse in Hong Kong. Its Monetary Authority slashed its main interest rate by 100 basis points - the biggest cut since the benchmark started a decade ago - yet the Hang Seng Index still dived 8.2 per cent.
Japan’s Nikkei had its worst percentage fall since Black Monday,with the index plummeting 9.4 per cent to close at 9,203.32, its lowest level since June 2003.
One of the biggest losers was Toyota Motors, down 11 per cent sparked by reports that operating profits were expected to fall by 40 per cent this year.
Meanwhile the yen rose steeply against the greenback, hitting 99.61 - its highest level since April 1 - putting more pressure on Japan’s slumping exports.
Indonesia’s index plunged 10 per cent - its largest decline since the Asian financial crisis - and forced the stock exchange to halt trading.
South Korea’s Kospi tumbled 5.8 per cent and is down 32 per cent for the year.
The Shanghai market managed to only pare its losses to 3 per cent on hopes - successful as it later turned out - that rates would be cut.
When European markets opened, London’s FTSE 100 brushed off the British government’s £50 billion cash offer to British banks and fell 6.8 per cent, while France’s CAC was off 8 per cent.
They regained some ground after the coordinated rate cuts by central banks in the United States, Britain, the European Union and others.
Mr Kevin Scully, managing director of corporate finance firm NRA Capital, said the selling activity in Singapore has taken a different tone.
He said retail investors have finished their selling of the penny stocks, which may explain why trading volumes have dropped to under one billion shares a day.
But investors are getting more nervous and are trying to redeem their funds, which means units trusts and hedge funds need to sell their assets.
Since Oct 2, the STI has shed 13 per cent, largely due to more pronounced selling of blue chips. Yesterday, 1.4 billion shares were traded.
Blue chips are the easiest to offload, and so while they have held up in recent months, they are now being hit. SingTel, for example, which had kept its head above the $3 mark since December 2006, fell below that yesterday. It lost 22 cents to $2.90, with heavy volume at 38 million shares.
Meanwhile, Asean finance ministers said in Dubai that the region’s bank systems were resilient.
Source : Straits Times - 09 Oct 2008
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