Investors buckle under the strain
UNDER attack from all sides, Asian investors surrendered. Poor earnings from high-profile US technology companies, Wall Street's tumble, the bulking up of local currencies and continued fears over America's corporate corruption, sent shares tumbling across the region.
A relatively upbeat forecast on the US economy from Federal Reserve chairman Alan Greenspan offered no comfort as billions of dollars were wiped off Asian portfolios in one-way trade.
While Greenspan had highlighted the strengths of the US economy, traders in Asia were taking more notice of his warnings that the impact of the corruption scandals would take a long time to heal, and could further damage consumer confidence.
Tokyo's Nikkei 225 fell for the third day, losing 112.31 to 10,138.31, a three-week low, before a late surge, up 45.60 to 10,296.02. Other markets followed after Wall Street suffered its seventh consecutive session of decline with a near-2% drop, which followed disappointing earnings statements from chip giant Intel, Apple Computer, and mobile phones leader Motorola.
As each company is a key player in the sectors on which Asian economies rely heavily for export-driven growth, the fallout was inevitable.
Sony, big in chips and computers, led the rout in Tokyo, where its shares fell by as much as 5% to a new low for the year in early trading.
The continued ascent of the yen, which dropped below 116 to the US dollar at one time in New York trading, added to the pain of exporters. Stocks of car giants Honda, Toyota and Nissan were trading more than 1% lower, despite growing conviction that the Japanese government was preparing to put the brakes on the yen's climb. After major intervention in May and June, the Japanese government has sat back, but ministers' recent warnings about the impact of the yen on the economy have fuelled expectations of further intervention soon.
Wall Street's fall drove down Hong Kong's Hang Seng index 167.87 points to 10,253.62, its third day of dives in a row.
Local sentiment was also hurt by a rise in unemployment to 7.7%, a record level which is expected to dent already-battered consumer confidence in the territory further. With the current flotation of the local arm of Bank of China sucking up more funds, other bank shares fell, and HSBC Holdings lost HK$1.25 to HK$85.75.
Technology stocks in Taiwan followed their rivals in Tokyo, and the Weighted Average tumbled 70.23 to 5247.78, but South Korean investors were spared similar pain by a public holiday.
The poor outlook for PC sales damaged Singapore's suppliers of computer hardware and software, and the Straits Times index slid 9.98 to 1575.87.
Australian stocks were back to where they started the year in US dollar terms, as the All Ordinaries index lost 35.23 points to 3071.70. Resources stocks, which have been slack recently on fears of falling US demand, were further hit by a profits warning from WMC, which took 0.5% off its share price.
Shares in Malaysia, Thailand and Indonesia were easier. The Kuala Lumpur Composite fell 3.43 points to 730.93, Thailand's SET lost 1.18 to 391.37, and the Jakarta Composite slid 5.35 points to 476.42.
