Asian Stocks Plunge After Shakeup of US Financial Companies



Stock markets across Asia followed U.S. and European shares sharply lower, in reaction to the collapse of the investment company Lehman Brothers.  The markets in Tokyo, Seoul and Hong Kong - which were closed Monday for a holiday - led the selling. VOA's Kate Pound Dawson in Bangkok has more.

Central bankers and national leaders around Asia rushed to assure the public that their economies were sound and that there was plenty of cash available to keep their financial systems flowing.  Even so, investors continue to sell shares.

In much of the region, financial companies examined their balance sheets for any exposure to the American investment bank Lehman Brothers, which filed for bankruptcy Monday.  There also are fears of massive losses at other international financial companies, such as the insurance giant AIG.

The Bank of Japan released $24 billion into the banking system, to make it easier for financial companies to borrow the cash they need.

Jake van der Kamp is an independent market analyst in Hong Kong.  He says the crisis is the worst in decades and could be prolonged.

"Global markets haven't seen anything like this in such a long, long time that it's hard to but any figure on it at all," he said.  "I would say you've got a matter of months before you start to build a bottom yet [before markets stop falling]."

The crisis began nearly 18 months ago in the United States, as many people who had taken out so-called "sub-prime" mortgages - home loans made to weak borrowers - struggled to pay their debts. Billions of dollars worth of those mortgages had been packaged into complex securities that the world's banks, insurance companies and investment funds had bought.  As the securities started to fall in value, investors around the world sold out of bond and stock markets.

Van der Kamp says Asia has a few advantages over other markets.   He says, Asian financial markets usually recover faster than do the older, more established markets of Europe and the United States.

Another advantage is that Asia's overall exposure to the sub-prime crisis is moderate and well secured.
"Because the Asian exposure would largely be Asian central banks, which have massive reserves, starting obviously with China and Japan, but all the rest, relative to the size of the economies, massive reserves, heavily in U.S. dollars," he said.  "There's probably not all that much direct danger."
Still, investors around the region on Tuesday counted up the toll from Wall Street's woes.

Japan's Nikkei stock index sank almost five percent, to its lowest point in more than three years. Hong Kong's Hang Seng index slumped nearly 5.5 percent and Seoul's Kospi lost slightly more than six percent.  Both markets were at their lowest points since early 2007.

Other markets also were rattled, with oil prices slumping more than $3 to just above $92 a barrel in Asian trading, as fears grew of a severe global recession.  That is its lowest level since February. 

This forum has been closed.
There are no comments in this forum. Be first and add one

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Russia’s Syria Involvement Raising Concerns in Europei
Luis Ramirez
October 02, 2015 4:45 PM
European nations are joining the United States in demanding that Russia stop targeting opposition groups other than the Islamic State militants as Russian warplanes continue to conduct raids in Syria. The demand came in a statement from Britain, France, Germany, Qatar, Saudi Arabia, Turkey and the United States Friday. VOA Europe correspondent Luis Ramirez reports.

Video Russia’s Syria Involvement Raising Concerns in Europe

European nations are joining the United States in demanding that Russia stop targeting opposition groups other than the Islamic State militants as Russian warplanes continue to conduct raids in Syria. The demand came in a statement from Britain, France, Germany, Qatar, Saudi Arabia, Turkey and the United States Friday. VOA Europe correspondent Luis Ramirez reports.

Video First Self-Driving Truck Debuts on European Highways

The first automated semi-trailer truck started its maiden voyage Friday, Oct. 2, on a European highway. The Daimler truck called 'Actros' is the first potentially mass-produced truck whose driver will be required only to monitor the situation, similar to the role of an airline captain while the plane is in autopilot mode. VOA’s George Putic reports.

Video Nano-tech Filter Cleans Dirty Water

Access to clean water is a problem for hundreds of millions of people around the world. Now, a scientist and chemical engineer in Tanzania (in East Africa) is working to change that by creating an innovative water filter that makes dirty water safe. VOA’s Deborah Block has the story.

Video Demand Rising for Organic Produce in Cambodia

In Cambodia, where rice has long been the main cash crop, farmers are being encouraged to turn to vegetables to satisfy the growing demand for locally produced organic farm products. Daniel de Carteret has more from Phnom Penh.

Video Migrant Influx Costs Europe, But Economy Could Benefit

The influx of hundreds of thousands of refugees and migrants is testing Europe’s ability to respond – especially in the poorer Balkan states. But some analysts argue that Europe will benefit by welcoming the huge numbers of young people – many of them well educated and willing to work. Henry Ridgwell reports from London.

Video Botanists Grow Furniture, with Pruning Shears

For something a bit out of the ordinary to furnish your home, why not consider wooden chairs, crafted by nature, with a little help from some British botanists with an eye for design. VOA’s Jessica Berman reports.

Video New Fabric Helps Fight Dust-Related Allergies

Many people around the world suffer from dust-related allergies, caused mainly by tiny mites that live in bed linen. Polish scientists report they have successfully tested a fabric that is impenetrable to the microscopic creatures. VOA’s George Putic has more.

Video Burkina Faso's Economy Deeply Affected by Political Turmoil

Political turmoil in Burkina Faso over the past year has taken a toll on the economy. The transitional government is reporting nearly $70 million in losses in the ten days that followed a short-lived coup by members of the presidential guard earlier this month. The crisis shut businesses and workers went on strike. With elections on the horizon, Emilie Iob reports on what a return to political stability can do for the country's economic recovery.

Video Fleeing Violence, Some Syrians Find Refuge in Irbil

As Syrians continue to flee their country’s unrest to seek new lives in safer places, VOA Persian Service reporter Shepol Abbassi visited Irbil, where a number Syrians have taken refuge. During the religious holidy of Eid al-Adha, the city largely shut down, as temperatures soared. Amy Katz narrates his report.

Video Nigeria’s Wecyclers Work for Reusable Future in Lagos

The streets and lagoons of Africa's largest city - Lagos, Nigeria - are often clogged with trash, almost none of which gets recycled. One company is trying to change that. Chris Stein reports for VOA from Lagos.

Video Sketch Artist Helps Catch Criminals, Gives a Face to Deceased

Police often face the problem of trying to find a crime suspect based on general descriptions that could fit hundreds of people in the vicinity of the crime. In these cases, an artist can use information from witnesses to sketch a likeness that police can show the public via newspapers and television. But, as VOA’s Greg Flakus reports from Houston, such sketches can also help bring back faces of the dead.

Video Thailand Set to Build China-like Internet Firewall

Thai authorities are planning to tighten control over the Internet, creating a single international access point so they can better monitor content. VOA Correspondent Steve Herman reports from Bangkok on what is being called Thailand’s own "Great Firewall."

Video Croatian Town’s War History Evokes Empathy for Migrants

As thousands of Afghanistan, Iraqi and Syrian migrants pass through Croatia, locals are reminded of their own experiences with war and refugees in the 1990s. VOA's Daniel Schearf reports from the town of Vukovar, where wartime scars still are visible today.

Video Long Drought Affecting California’s Sequoias

California is suffering under a historic four-year drought and scientists say even the state's famed sequoia trees are feeling the pain. The National Park Service has started detailed research to see how it can help the oldest living things on earth survive. VOA’s George Putic reports.

VOA Blogs