Asian, European stocks plunge


Richard Moore

I haven't seen any particularly good analyses of these recent stock market 
jitters. Of course it is clear that basic fundamentals are terrible (eg, 
derivative and housing bubbles, US debt & deficits), and that some kind of 
collapse is coming. My own suspicion is that China took sound steps to protect 
its economy by slowing down its own stock market, and is less worried about the 
resulting jitters than is the rest of the world. As long as there is any money 
to buy anything, that money will flow to China, as it is the world's primary 
manufacturing center.


Original source URL:

Asian, European stocks plunge as Wall Street sell-off fans global jitters

By Hans Greimel

3:12 a.m. March 14, 2007

TOKYO ­ Asian stocks plunged Wednesday and European shares opened sharply lower 
after Wall Street chalked its second-biggest point drop in four years and 
rattled already nervous markets worldwide.

The tumble came just as international markets were recovering in recent days 
from sharp declines in early March amid concerns about overvalued stock prices 
and slower U.S. economic growth.

But those worries resurfaced as troubles at U.S. sub-prime lenders and 
lackluster retail sales pushed the Dow Jones industrials down nearly 2 percent 
Tuesday, sparking selloffs across Asia.

Stocks in Japan, Hong Kong, Malaysia, India and Australia all fell more than 2 
percent, while shares in Singapore and the Philippines tumbled at least 3 

In Europe, London's FTSE 100 dropped 1.7 percent shortly after the open, while 
Germany's DAX lost 1.8 percent. France's CAC 40 was also 1.7 percent lower.

On the Tokyo Stock Exchange, Asia's biggest bourse, the benchmark Nikkei 225 
index sank 501.95 points, or 2.92 percent, to finish at 16,676.89 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 percent, Indian stocks dropped 3.1 percent,
while Philippine stocks plunged 3.4 percent.

Overnight, the Dow fell 242.66, or 1.97 percent, to 12,075.96 amid concerns 
about problems at U.S. sub-prime lenders, who provide mortgages to people with 
poor credit. The U.S. Commerce Department also said sales at retailers rose a 
less-than-expected 0.1 percent in February, suggesting consumer spending might 
be waning.

³The U.S. sub-prime concern has cast a great shadow on Asia. The worry is that 
it could spill over and cause the U.S. economy to slow down, and this will cause
a domino effect on the world economy,² said Lee Cheng Hooi, technical analysis 
manager at EON Capital in Kuala Lumpur. ³There could be more bloodbath to come.²

Still, other analysts maintained that Asia's economic fundamentals remain strong
and that the recent round of declines in stock prices were more likely a 
correction to cool markets that had risen too far too fast over recent months.

³The sell-off is in sympathy with the sharp sell-off we saw overnight on Wall 
Street, and it highlights the continued nervousness out there,² said David 
Cohen, chief of Asian economic forecasting at Action Economics in Singapore.

³In 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,² he

While the U.S. retail sales data and mortgage news that prompted the sell-off on
Wall Street ³are a little concerning,² fundamentals such as strong U.S. jobs 
data released Friday were still supportive of global equities.

³The world economy seems to be remaining on an upward trajectory,² 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 Feb. 27, 
which contributed to a 416-point drop in the Dow later that day.

The Shanghai Composite index fell 2 percent to 2,906.33 Wednesday. After gaining
for six straight sessions the market was primed for a retreat, analysts said.

³This is the market's own adjustment after gaining for six days,² said Zhu 
Haibin, an analyst at Everbright Securities in Shanghai.

In India, jittery investors sold off almost every blue chip stock, dragging the 
30-share Sensitive Index, or Sensex, the benchmark index of the Bombay Stock 
Exchange, down more than 3 percent.

Indian shares have seen wild swings each time the global markets have turned 
weak. The Sensex fell 43 percent in May-June last year ­ only to bounce back to 
hit record highs. The Sensex reached an all-time high of 14,643 on Feb. 7, 
before losing about 2,000 points, or 14 percent, in the latest round of global 

Elsewhere Wednesday, Sydney's S&P/ASX 200 fell 2.1 percent, Singapore's Straits 
Times benchmark sank 3.35 percent, and South Korea's Kospi closed 2.0 percent 

Associated Press Writers Gillian Wong in Singapore, Eileen Ng in Kuala Lumpur 
and Toby Anderson in London contributed to this report.

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