Bookmark & Share
FRESH concerns over the pace of the global economic recovery sent regional stocks tumbling yesterday after a spirited rally on most bourses in recent weeks.
The Shanghai market was the hardest hit, nose-diving 5.8 per cent, in its worst one-day percentage fall in nine months, and its lowest close in two months.
Investors across the region were cashing out recent gains amid a growing belief that the sharp rally needs a breather until more signs of an improvement in economic fundamentals emerge.
Those in Shanghai were also spooked by the Beijing government's efforts to rein in bank lending.
The dark mood soon spread and sparked a regional selldown. In Tokyo, Japanese stocks slumped 3.1 per cent while Hong Kong's Hang Seng Index plummeted 3.6 per cent.
In Singapore, the Straits Times Index retreated 85.53 points, or 3.25 per cent, to 2,545.98, in its largest one-day points drop since last October.
All 30 of the STI's component stocks finished lower.
The change of mood served as a grim reminder of the second anniversary of the US sub-prime mortgage crisis in August 2007, which eventually sparked the financial and economic tsunami that sent most of the globe reeling into recession.
CIMB-GK regional economist Song Seng Wun said: 'With the recovery story at risk again after the weaker-than expected US retail sales data and more bank failures, Asian investors chose to take some profit at the start of the new week.'
The reality check was also prompted by worries over the state of the US economy. Last Friday, real estate lender Colonial BancGroup collapsed in what is the biggest US bank failure so far this year.
The sea of red in Asia affected sentiment in Europe, where most major markets opened about 2 per cent lower.
More bloodletting in Asia could be on the cards today, given the heavy selling on Wall Street last night. As at midnight Singapore time, the Dow Jones Industrial Average was down 158.1 points or 1.7 per cent at 9,163.3.
Analysts caution that the weeks ahead could be rocky for Wall Street, with the August-to-October period traditionally regarded as rough trading months.
However, they also expect any correction to be temporary, as the market is still flush with investment funds.
DMG Securities technical analyst James Lim said: 'We recommend investors to stay out of the market for now, while those looking to accumulate should do so at lower levels after the potential correction period is over.'
Search Property News
