Asian Stocks Down Sharply in Early Trading
By MARTIN FACKLER
nytimes.com
TOKYO — Asian stock markets dropped sharply in early trading on Tuesday, as the shock waves from Wall Street’s weekend financial turmoil continued to roil global markets.
Equity markets in Tokyo, Hong Kong and Seoul all fell in their first day of trading since Sunday’s bankruptcy of Lehman Brothers and takeover of Merrill Lynch. Those markets were closed Monday for national holidays.
Even Asian markets that had traded on Monday fell for a second day, in a sign that the global stock sell-off would continue. The drops followed a dismal Monday on Wall Street, where the Dow Jones industrial average dropped 504.48 points, or 4.24 percent, its biggest one-day decline since the trading following the Sept. 11, 2001 terrorist attacks.
In Tokyo, Asia’s largest stock market, the benchmark Nikkei 225 dropped more than 5 percent, trading down 618.67 points at 11,596.09 at mid-morning, its lowest in six months. The broader Topix index was down 66.28 points, or 5.6 percent, to 1,110.92.
South Korea’s Kospi index fell 6.2 percent, and Hong Kong’s Hang Seng index opened more than 5 percent down. Among markets that were open Monday, Taiwan’s benchmark index was down 4.6 percent, following a 4 percent drop the previous day, and leading indexes in Australia and New Zealand were down about 2.5 percent.
In Japan, as in much of Asia, there is fear of a slow down in the United States economy, which would deprive the region of one of its largest export markets. If American consumers buy fewer cars, televisions and cameras, especially in the coming Christmas shopping season, it could spell trouble across manufacturing-based economies across the region, which depend on exports for profits.
Shares also fell on concerns of direct losses by Asian and particularly Japanese financial companies as a result of the problems on Wall Street. In its bankruptcy filing, Lehman Brothers revealed that some of its biggest creditors were Japanese banks. According to the filing, seven Japanese banks have $1.62 billion in outstanding loans to Lehman, including Aozora Bank, with an exposure of $463 million, and Mizuho Corporate, with $289 million.
Aozora said Tuesday in a statement that its actual exposure is “significantly smaller” than what Lehman reported.
Shares of these and other banks dropped sharply on Tuesday, leading the overall Tokyo market down. Aozora fell 19 percent, while two other large Japanese financial companies, Mitsubishi UFJ Financial Group and Nomura Holdings, both dropped 10 percent.
On Tuesday, Lehman’s Tokyo-based unit suspended operations on the orders of Japan’s Financial Services Agency, the government financial regulatory body. The agency also said it is investigating Japanese banks and brokerages to determine the size of their exposure to the bankrupt American financial company.
Still, banks in Asia had far less exposure to the collapsing American housing market than banks in the United States and Europe, leaving them in much better shape during the current crisis. This was reflected in the currency market, where the Japanese yen was seen as a haven from the battered American dollar.
The yen has jumped against the dollar amid a loss of confidence in the American economy and currency. On Tuesday morning, the yen was trading around 104 yen to the dollar; it had been trading at more than 107 yen per dollar on Friday.
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