Asian stocks plunged on Wednesday after Wall Street chalked its second-biggest drop in four years and rattled already nervous markets worldwide.
The tumble extended a couple weeks of international trading turmoil rooted in concerns about overheated global markets and slower growth in the American economy, a major export market for Asian companies.
Concern about US subprime lenders and lacklustre retail sales pushed the Dow Jones industrials down 1,97% overnight, sparking sell-offs across Asia.
Stocks in Japan, South Korea, Hong Kong, China and Malaysia were all down more than 2%, while Indian and Philippines stocks tumbled more than 3%.
At the Tokyo Stock Exchange, the region’s biggest bourse, the benchmark Nikkei 225 index sank 506 points, or 2,95%, to 16 673 points. Foreign investors who bought up stocks during the recent rally led the selling, traders said.
Hong Kong’s Hang Seng index fell 2,6%, Indian stocks opened 3,2% lower and Philippine stocks plunged 3,4%.
Overnight, the Dow fell 242,66 points, or 1,97%, to 12 075,96 amid concerns about US subprime lenders, who provide mortgages to people with poor credit. The US Commerce Department also said sales at retailers rose a less-than-expected 0,1% in February, suggesting consumer spending might be waning.
While Asian markets are sensitive to signals of a slowdown in the US economy, analysts said the economic fundamentals of the Asian region remain strong. The recent declines in stock prices were more likely a correction to cool markets that had risen too far, too fast over recent months.
”The sell-off is in sympathy with the sharp sell-off we saw overnight on Wall Street, and it highlights the continued nervousness out there,” said David Cohen, chief of Asian economic forecasting at Action Economics in Singapore.
”In perspective, you could still say that this is a correction after the strong rally that was experienced for the previous several months around the world,” he said.
While the US retail sales data and mortgage news that prompted the sell-off on Wall Street ”are a little concerning”, fundamentals such as strong US jobs data released on Friday were still supportive of global equities.
”The world economy seems to be remaining on an upward trajectory,” Cohen said.
The slump reversed a modest recovery in global markets from even bigger losses that started late last month with a sharp sell-off in Chinese stocks on February 27, which contributed to a 416-point drop in the Dow later that day.
The Shanghai Composite index was down 1,85% on Wednesday.
In India, jittery investors sold their holdings in almost every blue-chip stock, dragging the 30-share Sensex — the benchmark stock index of the Bombay Stock Exchange — down by 403 points, or 3,2%, to 12 580 in the first 30 minutes of trading.
Indian shares have seen wild swings each time the global markets have turned weak. The Sensex fell 43% in May and June last year when markets worldwide went through what analysts called a correction.
But Indian stocks bounced back in the following months, and the Sensex reached an all-time high of 14 643 on February 7, before losing about 2 000 points, or 14%, in the latest round of global declines.
Elsewhere on Wednesday, Sydney’s S&P/ASX 200 was 1,76% lower, while Singapore’s Straits Times benchmark had lost about 2,79% and South Korea’s Kospi declined 2%. — Sapa-AP
Gillian Wong in Singapore contributed to this report