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US-linked worries drag Asian markets down

Delayed reaction due to holiday break as recession fears dog investors

ASIAN stock markets were battered yesterday, after a four-day break for the new lunar year failed to dispel the same old fears that have been unnerving investors.

Steep falls on Wall Street last week had a delayed reaction here as markets waited to re-open after the holiday, with a rush for the exits once the opening bells rang.

Singapore’s Straits Times Index (STI) tumbled 63.68 points, or 2.17 per cent – to 2,868.29, its lowest close since Jan 22.

But volumes were relatively low with just 1.08 billion shares worth $1.64 billion traded, suggesting that most investors are seeking safety on the sidelines.

But the STI’s drop was nothing compared to the selldown in India, where the Sensex Index plunged 4.78 per cent, after a much-awaited stock listing made its debut more than 17 per cent below its issue price.

India was joined on a southward spiral by Hong Kong’s Hang Seng Index, which slumped 3.64 per cent, and South Korea’s Kospi Index, down 3.29 per cent.

Markets in Indonesia, the Philippines, Malaysia and Australia were also belted.

JP Morgan Private Bank’s senior portfolio manager, Mr Elan Cohen, said: ‘The weight of negative news in the US last week and the 4 to 5 per cent fall in stocks there factored heavily in Asian markets today.’

Wall Street, racked by recession fears and more subprime red ink, dived 4.4 per cent last week to close at 12,182.13 – down more than 8 per cent for the year.

The already jittery Asian market sentiment was exacerbated by comments from the Group of Seven policymakers who said yesterday that the global economy faces growing threats from a United States housing slump and credit crunch.

The wave of pessimism sent the STI down from the opening bell, with many blue chips taking a hit. Weaker US futures during Asian trading hours pushed the STI further south in the afternoon.

The banks were thumped. United Overseas Bank dropped 58 cents to $17, the day’s fifth-largest loser. DBS Group Holdings lost 36 cents to $16.66, while OCBC shed 16 cents to $7.14.

Property plays were also down. City Developments shed 40 cents to $11.06, Keppel Land lost nine cents to $5.74 and CapitaLand fell 23 cents to $5.45.

Other bruised blue chips included Singapore Exchange, off 47 cents to $8.79, and Singapore Airlines, which retreated 28 cents to $15.18.

The FTSE ST Mid Cap Index lost 1.7 per cent to 752.55, while the China Index plunged 3.1 per cent to 524.54.

But SingTel had a better day, adding a cent to $3.72 due to bullish analyst reports, while Neptune Orient Lines was up 10 cents at $3.20 ahead of its full-year results today.

Analysts warn of more volatility to come but note that the worst may soon be over.

DMG & Partners Securities senior dealing director Gabriel Yap said: ‘The downside could last another one to three months more. We’re already quite close to the bottom.’

 

Source: The Straits Times 12 Feb 08

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