Asia stock markets down after Wall St tumble

April 8, 2009
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, HONG KONG, Apr 8 – Stock markets across Asia were sharply down again Wednesday after losses overnight on Wall Street, where worries about the earnings season were underscored by gloomy news from aluminium giant Alcoa.

Hong Kong slid more than 4.0 percent, Tokyo was off more than 3.0 percent and Sydney was down 2.0 percent in intraday trade. Markets throughout the region were in negative territory.

It followed a dismal trading day Tuesday in the United States, where the Dow Jones Industrial Average dropped 2.3 percent and the S&P 500 shed 2.4 percent.

The US corporate earnings season got off on a sour note as Alcoa posted a net loss of 497 million dollars, with prices and demand down dramatically in the face of the global slowdown.

Hong Kong was worst off, with the Hang Seng giving up 4.05 percent, more than 604 points, to 14,324.75 in the morning session.

Francis Lun, general manager of Fulbright Securities, a Hong Kong brokerage, said investors in Asia were "scrambling for an exit" after the tumble on Wall Street.

"It is all the fault of the US market," Lun said. "Everyone is dumping financial stocks after George Soros said the banks were no good."

Soros, the billionaire hedge fund manager, said Tuesday that the month-long rally in the United States was a bear-market rally because the economy was still shrinking.

Investors have been especially worried about the troubled financial sector — concerns that deepened following a newspaper report highlighting the depth of the bad asset problem plaguing institutions.

According to the Times of London, new forecasts from the International Monetary Fund (IMF) are set to suggest that toxic debts racked up by banks and insurers could reach four trillion dollars.

The IMF said in January it expected the deterioration of US-originated assets to reach 2.2 trillion dollars by the end of 2010, but it is understood to be looking at raising that to 3.1 trillion dollars in its next assessment of the global economy, due to be published later this month, the report said.

In addition, the IMF was likely to forecast 900 billion dollars for toxic assets that originated in Europe and Asia, the Times said.

Financial stocks in the United States were broadly down on Tuesday. Bank of America fell 1.60 percent to 7.36 dollars and JPMorgan Chase dropped 3.37 percent to 27.25.

In Hong Kong, banking giant HSBC was down 5.6 percent at 48.35 Hong Kong dollars on Wednesday morning before new shares from a rights issue begin trading.

European markets were also in the red on Tuesday. London\’s FTSE 100 shed 1.58 percent, the CAC 40 in Paris lost 0.94 percent, and in Frankfurt the Dax lost 0.63 percent.

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