Stock markets worldwide are now undergoing a major correction in response to the continuing sub-prime market woes in the United States. As I had mentioned earlier, Asia is not immune to the ripples from Wall Street. Only difference is, the ripples are threatening to become small tsunamis.
At the opening bell in Asian markets, they have been trending downwards.
For example, the Philippine Stock Exchange Index has fallen about 10 percent over the past two days. The NZX-50 in New Zealand suffered its fifth day in decline. The Korea Composite Stock Price Index is at its lowest level since May 30. The Nikkei 225 Index and the Hang Seng Index are both down considerably.
The Kuala Lumpur Composite Index is also down. As at the close of today’s trading day, the Index stood at 1207.61 points. The last time that the KLCI touched this level was on Mar 20 when it was moving up. There were 1066 losers compared with only 41 counters that gained.
So, it has been a most bearish week for investors in Malaysia since the index crossed the 1300-point mark on its downward track since Aug 10.
Alarm bells are sounding with investors asking how much further the market can drop. Unfortunately, there are no quick answers and everybody must turn to the United States for a signal. Unless the Federal Reserve can play a bigger role to stabilise the loan problem back home, we’ll continue to feel the repercussions here.
James Soh, a strategist at Korea Investment & Securities Co in Seoul, summed up everything about today’s slump by saying: “All of Asia and other European markets are watching the US market.” Yes, indeed, we are.
UPDATE:
Like in Asia, the markets in Europe were also subject to another day of chaos on Thursday. London’s main FTSE 100 Index saw its sharpest fall in four-and-a-half years and it echoed across the other European countries.
But hours before the closing bell in New York, shares on Wall Street staged a dramatic recovery after suffering heavy losses earlier in the day. The main Dow Jones Index and the Nasdaq closed just marginally down while the S&P 500 was marginally up.
As I write this, trading in Asia is due to begin very shortly and eyes are now trained on New Zealand to see how their market will react.