Risk avoided at all costs; global recession seen deep
Uncertainty over US auto bailout, Citigroup fate
MSCI world stock index down 12% this week The benchmark index lost 102.69 points to 7,600.35 in the first minute of trading.
WAVES of selling in global stock markets crashed into Asia on Friday, with gains from the region's 5-year bull run now erased, and investors seen camping out in government bonds and cash for the rest of the year. US stocks were at the lowest in a decade, and oil prices fell to 3-1/2-year lows, trading below US$50 (S$76.65) a barrel, as commodity prices slumped on expectations of reduced demand as a result of a global recession. The fate of US corporate titans like General Motors, Ford Motor Company and Citigroup was uncertain, adding to a general mood of anxiety. Democratic congressional leaders demanded executives at the Big Three automakers come up with a detailed business survival plan in exchange for their support of up to US$25 billion in loans. Citi, not long ago the world's most valuable financial firm, was reportedly considering selling itself. 'It's one car crash after another for the markets right now and the risk of global economic recession is deepening by the day', said Mr Martin Slaney, head of derivatives at GFT in Australia. Investors priced in a 1-in-3 chance that the US Federal Reserve would cut its benchmark interest rate to 0.25 per cent from 1 per cent on or before its next policy meeting in about three weeks. Growing ranks of economists say the US central bank has already embarked on unprecedented monetary expansion to head off deflation, with its rate very likely heading to zero. Japan's Nikkei share average dropped 2.7 per cent, extending its weekly decline to around 12 per cent. Stocks in the Asia-Pacific region excluding Japan were down 1.3 per cent, according to an MSCI index, after earlier slipping to their lowest since October 2003 when global markets were just beginning to recover from the dot.com bubble. The MSCI All-Country World Index was down 0.4 per cent, plumbing the lowest levels since April 2003, having now fallen 53 per cent this year. US crude oil for January delivery was down more than half a dollar at at US$48.85 a barrel, after the December contract settled down US$4 at US$49.62, the lowest settlement since mid-May 2005. Oil has tumbled by nearly US$100 from record highs in July. For global investors, the yen is a weather vane of risk taking, with strength in the Japanese currency reflecting distaste for anything resembling risk. The yen slipped from 3-week highs against the US dollar and euro on Friday as short-term speculators booked profits, but it retained its overall strength with fears of a deep global recession rippling through markets. The US dollar recovered from a 3-week low of 93.55 yen struck the previous day to 94.00 yen, up 0.4 per cent on the day. The euro edged up 0.3 per cent to 117.05 yen, above a 3-week low of 116.45 yen hit on Thursday. 'The market needs positive news on the future of US automakers to make a decisive rebound, or there's little prospect that the current support for the yen will abate soon', said Mr Minoru Shioiri, chief manager of forex trading at Mitsubishi UFJ Securities in Tokyo. KUALA LUMPUR
Share prices on Bursa Malaysia were lower in early trading on Friday on lack of buying, mirrored the sharp fall on the Wall Street overnight amid fears about the impact of economic slowdown, dealers said. At 9.30am, the benchmark Kuala Lumpur Composite Index (KLCI) fell 10.15 points to 855.17 with finance and plantation-related stocks continued to be under selling pressure. The key index had opened 8.43 points lower at 856.89 on Friday morning. The Industrial Index declined 22.28 points to 2,094.84, the Finance Index dropped 53.31 points to 6,528.52 and the Plantation Index went down 69.48 points to 3,673.70. The FBMEmas shed 63.77 points to 5,615.96, the FBM30 slipped 67.40 points to 5,548.85, the FBM2BRD was 41.77 points lower at 4,282.57 and the FBMMesdaq Index fell 9.74 points to 3,352.17. Losers led gainers by 206 to 32 while 72 counters were unchanged, 1,013 still untraded and 37 others suspended. Volume stood at 60.041 million shares worth RM50.347 million (S$21.2 million) HONG KONG
Hong Kong shares opened 3.9 per cent lower on Friday, tracking an overnight fall on Wall Street spurred by weak US economic data and delayed action on a bailout for automakers, dealers said. The benchmark Hang Seng Index was down 483.75 points at 11,814.81. SHANGHAI
Chinese share prices dropped 4.40 per cent in early trade on Friday on a slump in US stocks overnight and lingering concerns about the global economy, dealers said. The benchmark Shanghai Composite Index, which covers A and B shares, was down 87.33 points at 1,896.43. The Shanghai A-share index lost 91.70 points, or 4.40 per cent, to 1,992.07, while the Shenzhen A-share index fell 28.02 points, or 4.78 per cent, to 558.03. TOKYO
Japan's Nikkei stock index was down 2.22 per cent by the lunch break on Friday in the wake of heavy losses on Wall Street, where another raft of weak US economic data spooked investors. The Nikkei dropped 170.93 points to 7,532.11 after the Dow Jones Industrial Average plunged 5.56 per cent overnight to a five-and-a-half year low. -- BERNAMA
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