Asian stocks tumbled today, tracking declines on Wall Street as investors feared more companies could succumb to the global financial crisis that forced the US to bail out troubled insurer American International Group.
Every regional benchmark fell deeply in the red.
Hong Kong’s Hang Seng Index led the region’s losses, tanking 1,272.86 points, or 7.22%, to 16,364.33 – its lowest level in over two years.
In Japan, the Nikkei 225 stock index was down 445.67 points, or 3.79%, at 11,304.12. Australia’s S&P/ASX200 index fell more than 3.5%, South Korea’s Kospi lost 3.6% and Shanghai’s index fell 5.8%.
The losses tracked US markets, where the Dow Jones industrial average fell about 450 points, or 4.06%, to 10,609.66.
Investors were unsettled by the Federal Reserve’s £47.2bn (€60bn) loan to AIG, the huge US insurer that lost billions in the risky business of insuring against bond defaults. It was the latest financial giant to fall in a historic financial crisis on Wall Street that’s already claimed investment banks Lehman Brothers and Merrill Lynch.
“It’s a complete collapse of confidence,” said Francis Lun, general manager of Fulbright Securities in Hong Kong. “The financial crisis in the US is hitting everyone, everyone is running for cover. If the largest insurance company can fail, than no one is safe.”
As equities markets staggered, investors fled to gold, seen as a safe haven in times of trouble. Gold for December delivery rose as much as $90.40, or 11.6%, to $870.90 an ounce in after-hours trading on the New York Mercantile Exchange after jumping 70 dollars to settle at $850.50 in the regular session.
Oil rose above $97 in Asian trade today, extending its big gains overnight. The dollar was little changed at 104.32 yen and the euro rose to $1.4345.
Financial stocks across Asia went into a tailspin.
Japan’s three megabanks fell hard: Mizuho Financial Group sank 7.2%, Mitsubishi UFJ Financial Group shed 4.6%, and Sumitomo Mitsui Financial Group retreated 7.4%.
Leading China lender Industrial & Commercial Bank of China Ltd, or ICBC, fell over 5% in Hong Kong.
Macquarie Group, Australia’s biggest investment bank and securities firm, took an 18% nosedive.
Richard Herring, the director of trading at Burrell Stockbroking, said Australian investors were nervous about AIG bailout.
“It has actually opened up a whole lot of other questions for investors to answer and that is: AIG is on the rack, what else is potentially out there that could go under?” he said.
Major exporters including car makers and electronics firms also wilted, hurt by a sagging dollar and slowing overseas markets.
In Japan, Nintendo, maker of the popular Wii game console, tumbled 4.4% after earlier hitting a near year-low.