Nerves crack under US pressure

NERVES cracked in Asia as the Wall Street rout showed no signs of ending and major investment banks were sucked into the Enron scandal. After showing surprising resilience on Tuesday, the region's markets plunged as the latest global stocks dive took US values back to the levels of 1997 and 1998 and the FTSE 100 down to six-year lows.

The recent rally in the US dollar was no comfort to Asian investors, who doubt that its strength will be maintained, and still expect exports to the US to suffer. The Nikkei 225 Average in Tokyo and Hong Kong's Hang Seng index plunged through the 10,000 mark, which many traders had hoped would be a support level for the two markets.

Investors were in no mood for numbers games and both markets were about 2.5% down in morning trade while South Korea led the region's early losses with a fall of more than 3%. While the allegations to Congress that Citigroup and JP Morgan Chase helped Enron cover up its debt problems deepened fears that the US saga of scandals is not yet over, analysts say Asian investors now fears Wall Street's slide is a portent of a coming double-dip recession.

A 267.91-point plunge to 9947.72 in the Nikkei was accelerated by poor exports in June, which could point to the damage that the stronger yen could do to the country's fragile economic recovery. Exports tumbled 3.9% month on month, the first fall in half a year, and came despite a 12% surge in the number of vehicles exported. While motor shares held steady, other exporters slumped, with Sony Corporation down almost 2%.

A 342-point plunge to 9971.9 in the Hang Seng index was expected to see retail investors dumping stock in Bank of China (Hong Kong) when dealings start in Thursday.

The shares, priced at HK$8.50, are expected to begin trading at about HK$8.10 although that would still leave private investors with a wafer-thin profit, They received a 5% discount on the price, so the stock cost them HK$8.075. The prospects for the debut were darkened by big falls in other bank stocks, with HSBC Holdings down HK$2.50 to HK$84.75, it slowest level since March.

Reeling South Korean technology stocks were further battered by the European Union's investigation into dumping charges. The Kospi index plummeted 21.35 points to 722.17, above its worst of the day but still close to a one-month low. Semiconductor stocks led the falls with Samsung Electronics down almost 4%.

Microchip makers pulled Taiwan's Weighted Average down 134.57 points to 5024.66. The All Ordinaries index in Sydney was beaten down 17.4 points to 3017.2 as News Corp, banks and resources stocks tumbled in unison. Even gold mining stocks, which had been holding up well, were down as much as 10% after the bullion price fell.

Falls in Singapore's tech sector brought the Straits Times index down 39 points to 1526.8 but Thailand stocks were also under pressure, and the SET index lost 8.19 points to 379.77. The Composite indices in Malaysia and Indonesia were also lower. The Kuala Lumpur measure fell 5.84 to 718.48 while the Jakarta index lost 6.79 to 470.29.

Prices and indices in this section are supplied from various sources and calculated at different times and may not always match those listed on the site.