Global selloff continues in Japan, Hong Kong, Singapore
August 28, 1998
Web posted at: 2:34 a.m. EDT (0634 GMT)
TOKYO (AP) -- Japan's finance
minister went out of his way Friday to
urge investors to remain calm, but
front-page headlines about Russia's
economic chaos and a new six-year
low on Japan's benchmark stock
index proved more persuasive.
As soon as trading began Friday,
Tokyo stocks plunged once again, falling to their lowest level in 12 years.
Even the dollar, normally sought out as a safety net in times of crisis, tumbled
against the Japanese currency.
The morning's developments in Asia indicated the global free fall that began
Thursday was not yet complete. The Dow Jones industrial average in New
York tumbled 357.36 points Thursday as the deepening crisis in Russia and
doubts about Japan's handling of its recession jolted stock markets around
the world.
"The drops are so large, it's not just fundamentals driving this, people are
scared," said Robert Allen Feldman, chief economist at Morgan Stanley
(Japan) Ltd.
Finance Minister Kiichi Miyazawa used his regularly scheduled news
conference Friday to urge investors to remain calm. "The most important and
basic thing is to not panic," he said.
But Japan's Nikkei stock average dropped below 14,000 in early trading to
its lowest levels since 1986. At its lowest point, the index was down 591.56
points, or 4.10 percent, to 13,822.23. It recovered somewhat, closing the
morning session down 284.82 points, at 14,148.97.
On Thursday, the Nikkei fell 452.24 points, or 3.04 percent.
'No one's buying except the government'
On the Tokyo foreign exchange market, the dollar bought 140.84 yen, down
2.82 yen from late Thursday in Tokyo, and below its late New York rate of
142.18 yen overnight.
Stock markets in Hong Kong and Singapore also continued their plunge
Thursday. After only 15 minutes of heavy trading, Hong Kong's Hang Seng
Index was down 48.10 points to 7,874.87.
"There are tremendous selling orders and no one's buying except the
government," said Antony Mak, a dealer at the city's Vickers Ballas
Holdings Ltd. "There is a battle going on."
For two weeks, the Hong Kong government has been propping up the local
stock and stock futures markets in an effort to punish speculators. If the
government "wins," stocks could move higher Friday, but with world
markets sharply lower, the forces working against that possibility were
intense, analysts said.
In Singapore, the benchmark Straits Times Industrial Index crashed through
the crucial 900-point level, tumbling 28.17 points, or 3.1 percent, to 882.71.
Many countries have edged toward recession
"People are very scared of financial markets right now," said Nicholas
Brooks of Santander Investment Securities in Singapore.
"People are watching what is happening everywhere, in Russia, in Latin
America. They are sitting on the sidelines, very nervous."
Much of the nervousness came from fears of another day like Thursday. The
Dow's 4.2 percent drop means the index is now 1,171 points below the July
17 record of 9,337.97.
In Russia, stocks plummeted 17 percent after trading was twice suspended.
The ruble continued to slide against the dollar, and the government
suspended dollar sales for the rest of the week. Pressure also mounted on
Boris Yeltsin to resign.
The Russian turmoil has added to a year's worth of worries over Asia's
financial crisis. As many countries, including Japan, have edged toward
recession, profits at a wide range of European and U.S. companies have
suffered.
Japan, the world's second largest economy, has been widely criticized for
not doing enough to revive its economy. Its new government is now
deadlocked in a dispute with the opposition over how to revive the nation's
troubled banking sector.
The insecurity that this infighting is causing among Japanese citizens and
investors was evident in Tokyo today.
"I think that something terrible is happening, and my job is going to be
affected," said Toshio Tadokoro, a 56-year-old travel agent, as he stared up
at a big screen that shows the Nikkei stock prices in Tokyo's main railway
station.
"I'm afraid this might lead to a big depression," said Takehiko Morooka, 29,
another worker. If that happens, he said, he will blame it on Japan's
politicians.
Copyright 1998 The Associated Press. All rights reserved. This
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