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Asia Stocks Lower Following Air Strikes - 2001-10-08

Asia stocks closed lower Monday following U.S.-led air strikes against suspected terrorist targets in Afghanistan. Fears that this is the beginning of a protracted war also pushed the dollar down in Asian trading.

Dealers say Asian investors are concerned that the U.S. and British air strikes against Taleban and al-Qaida targets in Afghanistan probably mark the beginning of a long conflict. Those fears weighed heavily on the region's stock markets Monday, with almost all of them closing on the downside.

Hong Kong stocks lost three percent to close at 9,967. Singapore's Straits Times Index lost 2.6 percent. In Taiwan, the benchmark index dropped nearly two percent in low turnover. It has lost more than 15 percent of its value since the September 11 terrorist attacks in the United States.

In the South Korea, the market was somewhat calmer. It closed just over one percent lower at 496. Oil refinery and gold mining shares gained ground because investors view them as safe havens during times of conflict. Tokyo's market was closed for a national holiday.

Market analyst Mark Matthews, of credit rating agency Standard & Poor's, says uncertainty is worrying institutional players as well as small-time traders. "Maybe investors had not been thinking hard enough about how this will drag on," he said. "It is much more than a Desert Storm-type operation, which in a matter of hours was brought to a successful conclusion. People are worried about retaliation by terrorists."

That fear also pressured the dollar on Monday. It skidded lower against the Japanese yen and Swiss franc in what dealers described as a knee-jerk reaction. Asian trading was thin and restrained with Tokyo's market closed. The dollar slipped to 119.85 on the yen and eased to 1.61 on the Swiss currency.

Dealers noted that a drawn-out conflict and further terrorist attacks would continue to disrupt the global economy, which already appears headed for recession.