Asian markets slide on US credit worries By YURI KAGEYAMA, AP Business Writer

Asian markets slide on US credit worries By YURI KAGEYAMA, AP Business Writer
2 minutes ago



TOKYO - Asian shares dipped Wednesday, with the Tokyo and New Zealand benchmarks tumbling to their lowest close in nine months, evidence of how the region is battling to shake off global jitters over a U.S. credit crunch.

ADVERTISEMENT


But economists and dealers said the gyrations on Asian stock markets were short-term, and some issues could even be good bargains — given the strong growth and earnings data from China, Japan and other regional economies.

The Nikkei 225 stock index, the benchmark for the region's biggest stock market, plummeted 369 points, or 2.19 percent, to 16,475.61, its lowest since Dec. 8, as financial issues got hammered by the nervousness about a fallout from the U.S. subprime mortgage crisis.

Japanese export issues also took a battering from the strong yen. Worries have been growing about a slowdown in the U.S. economy, fueled by faltering profit forecasts by major retailers.

Weakening American spending would be a blow to the Japanese and other Asian economies, which are all still heavily dependent on exports to the U.S.

In New Zealand, the benchmark NZX-50 index slipped below the psychological 4,000 barrier before ending down 61.2 points, or 1.5 percent at 4,004.46 — its lowest closing since December 2006.

"It's not a particularly pretty day for the market. World markets are all just following each other at the moment and they're quite skittish," said UBS equities director Paul Nicolson.

Stock markets were closed in India and South Korea for national holidays.

David Cohen, director of Asian forecasting at Action Economics in Singapore, said the central banks had responded quickly enough by pumping money to stabilize financial markets.

"We remain confident that things can calm down," he said. "There is enough momentum in the global economy it should ultimately sustain the solid growth in world GDP through the middle of the year."

Traders in Tokyo said bargain-hunting there may keep Japanese stocks from plunging too much. Some analysts also say market sentiment in Tokyo remains upbeat as worries about subprime mortgages in the U.S. may make it less likely the Bank of Japan will raise interest rates later in the month.

Prime Minister Shinzo Abe said Japan's economy remains on a growth track. Earlier this week, the government reported that the world's second-largest economy marked its 10th straight quarter of expansion April-June, although the pace of growth had moderated.

"The Japanese economy remains strong," Abe told reporters. "We do need to keep a close watch."

UBS broker Campbell Stuart in New Zealand said a general tone of uncertainty was pervading markets.

"This whole credit fear is not fully understood by everyone, so as a consequence most people are pretty jittery about everything," he said.

Worse still, fears are growing about the future of the overall U.S. economy. On Tuesday, U.S. retailers announced lower profit forecasts, including Wal-Mart Stores Inc. and Home Depot Inc.

A slowdown in the U.S. economy, a key export market for Asia, could spell a more real danger for the region.

Overnight in the U.S., the Dow shed 1.57 percent to 13,028.92, on the verge of falling below the psychologically important 13,000 mark, which it first crossed in late April.

Japanese Finance Minister Koji Omi said the economy wasn't in any danger of being thrown off its growth course.

"Thanks to speedy action by the central banks around the world, including the Bank of Japan, the worst appears to be over," he told reporters.

Although the Nikkei rebounded Tuesday, European markets didn't fare as well.

Britain's FTSE 100 fell 0.10 percent, Germany's DAX index slipped 0.52 percent, and France's CAC-40 fell 0.82 percent.

Wednesday in Asia, Indonesia at one point dipped 5.3 percent, the biggest percentage fall since the 1997 financial crisis. The Australian market also fell, losing 2.3 percent by midday, while Thai shares declined 1.8 percent midday in quiet trading.

The main index for Philippine shares ended at a five-month low, shedding 4.1 percent. But dealers said they expected share prices to soon rebound on bargain-hunting.

"Today's movement is exaggerated," said Banco de Oro Market Strategist Jonathan Ravelas. "If you believe in the Philippines' fundamentals, I think this is an opportunity to start building up one's portfolio."

In the short term, Cohen warned more bad news could be expected about troubled hedge funds, which could set off another drop in regional stocks.

"It's going to be on a roller coaster for a little while. Clearly investors are nervous," he said.