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TOKYO: Asian stock markets went into a tailspin Friday, with Tokyo down more than nine per cent as fears grew that the global financial crisis is spiralling out of control, dealers said.
The Nikkei Index was down 9.62 per cent lower at 8276.43 at closing.
It was Tokyo's biggest plunge in about two decades as investors took fright at news that the credit crisis has claimed a big victim in Japan with the bankruptcy of Yamato Life Insurance.
The bloodbath quickly spread to other markets. Sydney plunged 8.34 per cent, Singapore lost 6.59 per cent and Seoul was down 5.68 per cent. China was 4.25 per cent lower as Hong Kong slid 7.03 per cent. Bangkok dived 8.04 per cent, Mumbai slipped 6.16 per cent, Kuala Lumpur slipped 3.16 per cent and Manila plummeted 8.33 per cent. Taiwan’s financial markets are closed for National Day.
"It is ghastly," said Macquarie Equities associate director Lucinda Chan in Sydney.
"Investors are buying up gold. It's the only safe haven out there, otherwise it's red everywhere."
CMC Markets senior dealer Matthew Lewis described the rout as "total market capitulation."
The Bank of Japan pumped 4.5 trillion yen (US$45.5 billion) into the money markets amid the turmoil in Tokyo, while the stock exchange briefly halted some trading in futures and options.
"It's beyond panic," Oh Hyun-Seok at Samsung Securities in Seoul told Dow Jones Newswires.
"Concerns about the global economy are deepening further and there is no signs of easing in the global credit crunch."
The dollar tumbled to 98.43 yen, down from 99.50 overnight in New York as investors fled risky assets.
The Dow Jones Industrial Average plunged 7.33 per cent Thursday as jitters intensified over the global financial crisis.
General Motors tumbled 31 per cent to US$4.76 after Standard and Poor's raised questions about the auto giant's liquidity.
"Investor sentiment continues to be fragile while there is no easing in worries that the US is heading into recession and while bank funding costs remain elevated," said NAB Capital analyst John Kyriakopoulos in Sydney.
Investors mulled news that US authorities were eyeing the possibility of direct capital injections to troubled banks as a means of shoring up a fragile system.
Such a move, already announced by British authorities, would give the government special shares of the banks in exchange for helping boost badly needed capital in an effort to unclog credit markets, analysts said.
But fears were growing that the measures may be too late to contain the crisis.
"The world is at severe risk of a global systemic financial meltdown and a severe global depression," warned Nouriel Roubini, a New York University economist known as "Dr. Doom" for his foresight in predicting the crisis.
"The US and advanced economies' financial systems are now headed towards a near-term systemic financial meltdown as day after day stock markets are in free fall, money markets have shut down while their spreads are skyrocketing, and credit spreads are surging through the roof," he wrote in his newsletter.
Markets were hoping for even more radical action from finance ministers and central bankers from the Group of Seven rich nations which meet in Washington later Friday, after emergency interest rates cuts by top world central banks this week failed to calm the turmoil.
Singapore followed suit on Friday, loosening its monetary policy for the first time in more than four years.
"Without concrete measures - such as more co-ordinated rate cuts or the Europeans following a unified approach to its banking crisis - equity investors will remain very nervous," warned Kyriakopoulos.
The price of safe-haven gold rose while oil prices fell on worries about the prospect of weaker demand and as investors liquidate assets.
"Everyone who has assets, whether commodities or stocks, wants to exit and change those assets to cash," said Ken Hasegawa, a broker at Newedge Japan.
- AFP/yb
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