Jitters over a looming war in the Persian Gulf and tensions on the Korean Peninsula sent most Asian stock markets lower on Tuesday. The Nikkei 225 fell below the 8,000 level to a 20-year low. Concerns over corporate reforms in both Japan and South Korea also scared investors.
Japan's Nikkei closed down two percent on Tuesday, to 7,862. It was its first close below 8,000 in 20 years.
While the possibility of a U.S.-led war on Iraq is eroding confidence, Japanese investors also are frustrated by the country's inefficient companies and long economic slump, according to Hiromichi Shirakawa, chief economist for investment bank UBS Warburg Japan.
"There are basically three factors. The first one is related to geo-political risks. The second problem is that economic resource allocation in the economy seems to be inefficient. ... The third one is the continuous deflation in the domestic economy," said Mr. Shirakawa.
Elsewhere in Asia, South Korea's Kospi index shed two percent to close at 532, a 17-month low. That comes a day after North Korea test-fired a second cruise missile. An international dispute over North Korea's nuclear programs has raised tensions on the Korean Peninsula in the past six months and has led to a series of provocative acts by Pyongyang.
But investors also sold shares in conglomerates after South Korea's largest oil refiner, SK Corporation, revealed its earnings last year were half the figure the company reported a month ago. The company's shares sank by the daily limit of 15 percent.
Benchmark indexes hit four-year lows in both Hong Kong and Australia on Tuesday.
Hong Kong's main share index sank briefly below 8,800, a level not seen since 1998. The Hang Seng, however, recovered in the afternoon to end at 8,859, about two points below Monday's close.
Australia's main index fell to 2,715 points, down 18 points.
