Asian stocks plunge on first day of trading after U.S. downgrade
Asian shares plummeted Monday on the first day of trading after an unprecedented downgrading of U.S. government credit last week, raising fears the global economy was heading for deeper trouble.
In what could be a preview of U.S. markets, Hong Kong's Hang Seng fell 2.3% to 20,464.03, Japan's Nikkei 225 stock average dropped 2.2% to 9,097.56 and the Shanghai Composite Index lost 3.8% to end at 2,526.82.
"From how fast the market is falling, I can see people are really scared,” said Chen Wenzhao, an analyst for China Merchant Securities in Shanghai. “In the short term, it may be really hard for people to overcome their worries."
The steep losses came even after global policymakers said efforts would be made to restore confidence in financial markets.
Trading on South Korea's Kospi was briefly halted after it nosedived by as much as 7.4% in the afternoon. The index ended the day down 3.8% to 1,869.45.
"We're seeing real panic selling now," said Im Jeong Jae, a Seoul-based fund manager at Shinhan BNP Paribas Asset Management Co., which oversees about $29 billion, told Bloomberg. "Concerns about global economic conditions are affecting Asian markets overall. Korea, which has relatively more liquidity, is feeling a harder pinch."
Indonesian President Susilo Bambang Yudhoyono said he would hold an emergency meeting with his Cabinet after stocks in his country fell about 5%, Reuters reported.
In other Asian markets, Taiwan's Taiex slumped 3.8% to 7,552.80, Australia's S&P/ASX 200 index dropped 2.9% to 3,986.10 and Singapore's Straits Times Index fell 2.9% by later afternoon.
-- David Pierson
Photo: An investor in front of a stock price board at a brokerage in Shanghai earlier this year. Credit: Eugene Hoshiko / Associated Press