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Japan Loses Nearly 7% as Asia Gets Routed

CNBC.com
Wednesday, 19 Nov 2008 | 7:14 PM ET

Asian markets fell like dominoes Thursday after U.S. stocks hit their lowest in more than five years. The rout was especially pronounced in Japan, where the Nikkei lost almost 7 percent, falling below the key 8,000 technical level for the first time in three weeks.

Investors are bracing for tough conditions ahead after the latest bearish signals for the global economy: The Federal Reserve slashed its U.S. growth forecasts, U.S. consumer prices fell at a record pace last month, and Japan's October exports fell by the most in seven years.

The bleak outlook, which is hitting sectors from South Korean chipmakers to U.S. auto makers, comes amid renewed worries about the global financial system. Citigroup shares tumbled to a 13-year low on Wednesday as investors questioned survival prospects.

Oil prices meanwhile dropped for a fifth straight session to below $53 a barrel. The yen also benefited from the aversion to risk, holding near one-week highs against both the dollar and the euro .

Japan's Nikkei 225 Average plunged 6.9 percent in its biggest one-day loss in a month, as exporters such as Canon were nailed by a stronger yen and fears that a worsening economy will batter earnings. Mitsubishi UFJ Financial Group and other large banks fell after shares in Citigroup plunged 23 percent to a 13-year low as investors questioned the survival prospects of the U.S. banking giant.

South Korea's KOSPI ended 6.7 percent lower as banks and Hynix Semiconductor tumbled on deepening sectoral worries, with some banks falling by nearly the daily limit of 15 percent. KB Financial Group, the holding firm of South Korea's biggest commercial lender Kookmin Bank, dropped 14.9 percent, and Hana Financial Group fell 14.72 percent. The index has fallen for an 8th straight losing session and has lost more than 18 percent since Monday last week. The KOSPI is just 6.3 percent away from the Oct 27 low of 892.16 points, which itself was the lowest January 2005.

Australian shares closed 4.19 percent lower as concerns about a prolonged global recession triggered sharp losses in leading miners BHP Billiton and Rio Tinto.

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In markets still trading, Hong Kong shares dropped 5.5 percent to a three-week low, after dismal U.S. economic data prompted a global flight to cash, but the main index held above
the 12,000-point level. Unwinding carry trades amid a global equities sell-off pushed the Hong Kong dollar to the upper limit of its pegged trading band against the greenback. The territory's central bank has injected more than $2 billion into the banking system this week in a bid to curb the appreciation in the local currency. ocal property counters plunged, beaten down by a slew of warnings from investment banks on further corrections in home prices as banks tighten lending. Sun Hung Kai Properties, the territory's leading property developer slid 7 percent, while billionaire Li Ka-shing's Cheung Kong Holdings gave up 6 percent. Hang Lung Properties plunged 9 percent.

Singapore's Straits Times Index extended losses, down 4 percent, led by falls in financials and commodities after U.S. stocks slid over five percent on a weakening corporate outlook. Top lender DBS Group was down 3 percent, commodity trader Noble Group fell 8 percent and SembCorp Industries slid 6 percent.

China's Shanghai Composite Index was down, taking its cues from a tumble in Wall Street stocks as it bumped up against strong resistance after the previous day's strong gains. Banks led the decline.