US concerns dampen KLCIPETALING JAYA: Stock markets in Asian slumped yesterday as investors backed away from risky investments such as equities amid growing concerns the US economy is moving into a recession.
With the United States still a key market for many export-oriented Asian economies, including Malaysia, a downturn in the world's largest economy would derail worldwide growth, analysts said.
"Asian markets will fall in line with the United States. There is no decoupling of the financial markets,'' Hwang-DBS Investment Management chief investment officer David Ng told Bloomberg yesterday.
Sharp triple-digit losses on Wall Street overnight set the bearish tone for Asian market trading yesterday.
"Weak US retail sales figures and disappointing results from Citigroup Inc exacerbated investors' pessimistic mood,'' OSK Investment Bank wrote in its morning note to clients yesterday.
And, by the end of trading across Asia yesterday, that pessimism was apparent.
The KL Composite Index (KLCI) plunged 52.05 points, or 3.5%, to close at 1,453.66. The benchmark index has fallen for three consecutive days from a record high.
Only four of the 100 KLCI component stocks ended higher, with heavyweights Sime Darby Bhd, Bumiputra-Commerce Holdings Bhd, Telekom Malaysia Bhd and Tenaga Nasional Bhd all posting double-digit losses.
On the whole, declining stocks outnumbered risers by 824 to 100 on volume of 1.17 billion shares worth RM2.84bil.
Elsewhere, the Hong Kong bourse was the worst hit yesterday, with the Hang Seng Index plunging 5.4% to 24,450 points. It was the index's biggest single-day drop since Sept 11, 2001.
In Singapore, the Straits Times Industrial index fell 3% to 3,058 points.
The two indices have plummeted more than 20% from their respective peaks reached in October last year.
Japan's Nikkei 225 dived 3.4% to 13,504 points, while South Korea's main KOSPI index retreated 2.4% to 1,704 points, and the Australian S&P ASX 200 index fell 2.5% to 5,809 points.
China's Shanghai and Shenzhen bourses, which were largely driven by domestic investors, lost more than 2.4% each yesterday.
The turmoil in the US subprime mortgage market had already curbed investors' appetite for risky bets and growing worries that the world's largest economy was slipping into recession would cap the upside potential for stocks in the near term, analysts said.
At yesterday's close, most Asian stock markets were down for the year, except for Bursa (+0.6%) and the Shanghai and Shenzhen bourses.
Meanwhile, crude oil futures in New York fell to just above US$90 a barrel yesterday from US$99 at the start of the year.
Gold was traded at below US$890 an ounce, down from a high of US$914 on Monday.
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Jan 17 2008, 07:50 AM
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