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Asia stocks drop on dark global economy outlook
(Agencies)
Updated: 2008-10-23 11:39 HONG KONG -- Asian stocks dropped to a four-year low for a second day on Thursday, with exporters especially hard hit, on growing fears that a severe global downturn would depress corporate earnings further.
Markets in developing countries, especially those that depend on portfolio flows to balance their current accounts, were abandoned overnight, with almost no one spared from a sharp slowdown in the global economy that has pushed crude prices below $70 a barrel and dragged copper prices to a three-year low. Hungary was among those suffering the most. Even as the central bank raised interest rates sharply to prop up the battered currency and the government sought help from the International Monetary Fund, investors dumped the forint, worried about the country's ability to finance a large foreign debt. The outlook for export-dependent Asian economies darkened, hitting the shares of many high-profile companies that have staked their business on overseas sales, such as Samsung Electronics and Canon Inc. Japan's trade data showed exports in September were much weaker than expected, with exports to the United States down 11 percent from the same month last year. "Demand is weakening across the globe. Not to mention the United States, falls in exports to the European Union are accelerating," said Junko Nishioka, an economist with RBS Securities in Tokyo. "Rising anxiety over the financial sector appears to have affected economic activity." The MSCI index of Asia-Pacific stocks outside Japan fell 3.3 percent to the lowest since November 2004. Japan's Nikkei share average slumped 6.9 percent, having now fallen 21 percent in October alone. Japanese exporters have been undercut by the persistent strength of the yen, which reduces their competitiveness. The yen hit a five-year high against the euro earlier on Thursday. South Korea's KOSPI index slumped 7.6 percent, led by shares of Samsung Electronics and steel producer POSCO. US light crude oil prices clung to small gains, up 92 cents to $67.67 a barrel, after hitting a 16-month low of $66.20. Oil prices have fallen by a third in October in anticipation of a steeper decline in demand from big consumers such as the United States and China. Indeed, a report earlier this week showed Chinese annual economic growth in the third quarter slowed sharply to 9 percent compared with 10.1 percent in the second quarter. The government has been setting up initiatives aimed at supported growth and protecting consumers, such as policies to make home ownership easier. |
