US recession fears sink global markets
Updated: 2008-01-21 22:36
Traders also have shrugged assurances from US Federal Reserve Chairman Ben Bernanke that the US central bank is ready to act aggressively -- which means a likely big interest rate cut later this month -- to help the sagging economy.
Some analysts predict that Asia won't suffer dramatically from a possible US recession because increased trade and investment within Asia has made the region less reliant on the United States than in the past. Excluding Japan, 43 percent of Asia's exports go to other nations in the region, Lehman Brothers calculates, up from 37 percent in 1995.
But on Monday, uncertainty and pessimism reigned.
In Tokyo trading, exporters got hit hard, partly because of the yen's recent strength against the dollar. Toyota Motor Corp. lost 3.3 percent and Honda Motor Co. sank 3.4 percent.
In Hong Kong, Bank of China dropped 6.39 percent and China Construction Bank slid 7.83 percent.
In Mumbai, India, the benchmark Sensex index fell 1,353 points, or 7.4 percent -- its second-biggest percentage drop ever -- to 17,605.35. At one point, it was down nearly 11 percent.
The decline hit companies across the board, with power utility Reliance Energy Ltd. falling 16.4 percent. Major software company Tata Consultancy Services Ltd. slid 7.6 percent
"A gloomy US climate has affected the global markets. Even if those markets recover, it will take sometime for the recovery to reach India because today's fall has been so drastic," said Jayant Pai, of the Mumbai investment company IL&FS Ltd.
Still, Pai and others suggested that the declines could lead to a buying opportunity.
"The sell-off today takes us close to the bottom," she said.
Since the start of the year, Japan's Nikkei index has declined 13 percent, while Hong Kong's blue-chip index is down more than 14 percent. Chinese mainland's Shanghai index -- which nearly doubled last year -- has fallen 6.6 percent since the beginning of the year and nearly 20 percent from its all-time closing high on Oct. 16.
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