Asian shares sank yesterday on fears that a deepening US financial sector crisis and soaring oil costs would further sap faltering world economic growth.
The plunge came as concerns grew about the solvency of US mortgage finance titans Fannie Mae and Freddie Mac, which underpin trillions of dollars in home loans and whose failure would be viewed as catastrophic.
Japan, Asia’s biggest bourse, slid nearly 2 percent, Taiwan tumbled 4.5 percent, Hong Kong fell 3.8 percent and China closed down some 3.5 percent even though the US government has just extended a lifeline to the mortgage giants.
“The market has been absolutely savaged today,” said Dominic Vaughan, a senior dealer at CMC Markets in Australia, where the stock market ended more than 2 percent down.
“There is still a belief that any measures done by the US government or the US Federal Reserve may not be enough,” he said.
The US plan announced on Sunday provides access to substantially increased credit to the two firms, which own or guarantee almost half of all US home loans and are in crisis owing to the worst US housing downturn in decades.
But the initiative has so far failed to patch up investor confidence, which had already been shredded by slowing economic growth and falling business profits as inflation surges thanks to soaring crude oil and food prices.
Oil was trading at around US$145 per barrel yesterday, only a little shy of all-time highs above US$147 scaled last week. The price of black gold has doubled over the past year and is up five-fold since 2003.
Elsewhere in Asia, Indian shares plunged 4 percent, Singapore was more than 3 percent down and South Korea closed 3.2 percent lower as trading screens across the region turned red.
“We may witness more selling pressure in the near term on concerns that the worst of the US credit crisis is not over yet,” Linus Yip at First Shanghai Investments in Hong Kong told Dow Jones Newswires.
Asia’s smaller markets also suffered, with New Zealand share prices hitting a three-year low after a 1.3 percent slide. Indonesian shares were down more than 1 percent, while the Philippine market closed 1.79 percent lower.
“Negative global news is keeping investors away,” said Bhaskar Kapadia of Pyramid Securities in India.
Yesterday’s slide continued this year’s rout, with the Asia-Pacific stock market as a whole down approximately 18 percent since the start of the year.
Shares began sliding last year after a default crisis among “subprime” — or riskier — US mortgages emerged. Banks have lost billions of dollars on investments tied to the mortgages, precipitating a global credit crunch.
Investors are anxiously waiting for results this week from key US financial companies, which could reveal yet more subprime-related losses.
China, which is battling high inflation, is also scheduled to release economic data.
European shares also sank yesterday and investors were braced for more volatility on Wall Street later in the day.
SEPARATE: The MAC rebutted Beijing’s claim that Taiwan is China’s province, asserting that UN Resolution 2758 neither mentions Taiwan nor grants the PRC authority over it The “status quo” of democratic Taiwan and autocratic China not belonging to each other has long been recognized by the international community, the Mainland Affairs Council (MAC) said yesterday in its rebuttal of Beijing’s claim that Taiwan can only be represented in the UN as “Taiwan, Province of China.” Chinese Minister of Foreign Affairs Wang Yi (王毅) yesterday at a news conference of the third session at the 14th National People’s Congress said that Taiwan can only be referred to as “Taiwan, Province of China” at the UN. Taiwan is an inseparable part of Chinese territory, which is not only history but
CROSSED A LINE: While entertainers working in China have made pro-China statements before, this time it seriously affected the nation’s security and interests, a source said The Mainland Affairs Council (MAC) late on Saturday night condemned the comments of Taiwanese entertainers who reposted Chinese statements denigrating Taiwan’s sovereignty. The nation’s cross-strait affairs authority issued the statement after several Taiwanese entertainers, including Patty Hou (侯佩岑), Ouyang Nana (歐陽娜娜) and Michelle Chen (陳妍希), on Friday and Saturday shared on their respective Sina Weibo (微博) accounts a post by state broadcaster China Central Television. The post showed an image of a map of Taiwan along with the five stars of the Chinese flag, and the message: “Taiwan is never a country. It never was and never will be.” The post followed remarks
INVESTMENT WATCH: The US activity would not affect the firm’s investment in Taiwan, where 11 production lines would likely be completed this year, C.C. Wei said Investments by Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) in the US should not be a cause for concern, but rather seen as the moment that the company and Taiwan stepped into the global spotlight, President William Lai (賴清德) told a news conference at the Presidential Office in Taipei yesterday alongside TSMC chairman and chief executive officer C.C. Wei (魏哲家). Wei and US President Donald Trump in Washington on Monday announced plans to invest US$100 billion in the US to build three advanced foundries, two packaging plants, and a research and development center, after Trump threatened to slap tariffs on chips made
CONSISTENT COMMITMENT: The American Institute in Taiwan director said that the US would expand investment and trade relationships to make both nations more prosperous The US would not abandon its commitment to Taiwan, and would make Taiwan safer, stronger and more prosperous, American Institute in Taiwan Director Raymond Greene said. “The US’ commitment to Taiwan has been consistent over many administrations and over many years, and we will not abandon our commitment to Taiwan, including our opposition to any attempt to use force or coercion to change Taiwan’s status,” he said in an exclusive interview with the Liberty Times (the sister newspaper of the Taipei Times) on Friday last week, which was published in the Chinese-language newspaper yesterday. The US would double down on its efforts
RSS