Enron debacle sparks plunge

ASIAN stocks tumbled after Wall Street had plunged to three-month lows on fears that Enron's accounting debacle will raise doubts about the soundness of US corporate numbers.

Shares in Tokyo slumped 1.5%, taking the Nikkei 225 through 10,000 with a fall of 149.75 to 9876. Hong Kong stocks unwound all of Tuesday's sharp gains with a 2.3% dive, and recently-soaring South Korean stocks were savaged by almost 4%.

Falls were triggered by fears of a US market meltdown if other companies' accounts are proved to have been based on smoke and mirrors. Suspicions were deepened after shares in the Tyco International conglomerate crashed 20% in New York on reports of backhanders paid to directors during its aggressive acquisition policy.

A delay in the release of the financial statements of Williams, another energy group, added to the suspicions that Enron is not the end, and the Dow fell 2.5%. Trading in Asia was also subdued ahead of the US Federal Reserve's Open Market Committee decision on interest rates due later today.

Political concerns were added to the economic woes and corporate earnings gloom in Japan after Prime Minister Junichiro Koizumi summarily sacked his Foreign Minister Makiko Tanaka after a spat about Afghanistan. This had nothing to do with economic policy, but raised concerns that Parliament could be paralysed by internecine strife and the further melting away of Koizumi's power base. This would threaten to derail his controversial reform plans, which are under attack for putting yet more pressure on Japan's reeling economy.

The Nikkei's fall below 10,000 for the first time since 13 November was led by large exporters as investors ignored the latest apparently upbeat consumer confidence numbers for the US. Sony shares tumbled 2% while Toshiba and Fujitsu were even harder hit after the chipmakers slashed full-year profit forecasts on Tuesday.

Focus in Hong Kong switched from HSBC Holdings' exposure to non-performing loans in Argentina to its potential credit problems in the US in the wake of the Enron affair. HSBC shares crumbled 2.3% to HK$87, dragging the Hang Seng index down 257.3 to 10,757.

Sharp rises in locally-quoted mainland cellphone companies on Tuesday were the signal for rapid profit-taking and China Mobile and China Unicom gave up all their gains.

South Korean banks were hammered by a domestic corporate crash after medical instruments group Medison went bust, leaving banks and other creditors holding worthless paper. The Kospi dived 26.15 to 747.88.

Wall Street's fall, and reports that Taiwan's major chipmakers may be blocked from building high-margin fabrication plants on the mainland pushed the Weighted Average down 36.06 to 5810.13. As directors of Taiwan Semiconductor raged about government interference, its shares lost more than 2%.

Some late buying of blue-chips rescued Australia's All Ordinaries from its worst levels of the day after Wall Street's fall, leaving it ahead 40.8 at 3433.5. Singapore's Straits Times index lost 15.6 to 1755.6. The Kuala Lumpur Composite gained 0.76 to 707.08, and the Thai SET added 0.36 to 340.05 but in Jakarta the Composite index wilted 4.13 to 442.71.

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