Asian stocks tumbled, driving the Nikkei 225 Stock Average to its biggest fall since October 1987, on concern that the credit crisis would topple more banks and slowing growth will cut demand for exports.
Indonesia halted stock trading after the benchmark index tumbled 10 per cent. Mitsubishi UFJ Financial Group dropped 5.9 per cent as the International Monetary Fund (IMF) said institutions may need $675 billion in fresh capital and as the cost of protecting Asia-Pacific bonds from default climbed. BHP Billiton led a record tumble by raw-material producers, on concern commodities demand will slump.
The MSCI Asia Pacific Index fell 7.4 per cent to 91.42 as of 7:39 pm in Tokyo, the biggest drop since April 2, 1990, and bringing its decline this year to 42 per cent. Financial stocks contributed the most to the index’s drop.
Japan’s Nikkei 225 Stock Average lost 9.4 per cent to 9,203.32, the most since global markets crashed in October 1987. Toyota Motor Corp slumped after Nikkei English News said profit may drop and after the dollar slumped versus the yen.
The Hang Seng tumbled 8.2 per cent as Hong Kong’s monetary authority cut interest rates in an effort to keep the credit crisis from spreading. Australia’s S&P/ASX 200 Index declined 5 per cent as consumer confidence fell the most in two years.
Shares dropped across Asia, extending a global sell-off fueled by the deepening credit crisis, which has wiped out more than $5 trillion of market value in the past week.
Global rout
Indonesia’s trading halt, the first since September 2000, when a bomb blast at the stock exchange killed 15 people, is among the latest official measures to stem the market rout.
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The UK on Wednesday said it would invest about $87 billion in the country’s banks. Australia’s central bank yesterday cut interest rates by the most since 1992, while Federal Reserve Chairman Ben S Bernanke signaled he’s also ready to reduce borrowing costs.
The efforts have done little to assuage concerns that the credit crisis will claim more institutions. Standard & Poor’s 500 futures dropped 1.6 per cent on Wednesday. Financial companies dragged the index down by 5.7 per cent yesterday.
Lower growth forecast
The cost of protecting bonds from default increased, with the Markit iTraxx Japan index of credit-default swaps rising 7.5 basis points to 201.5, according to Credit Suisse Group. The dollar dipped below 100 against the yen for the first time since April 1. Treasuries rose for the fifth time in six days.
Mitsubishi UFJ, Japan’s biggest bank, slumped 5.9 per cent to 763 yen. National Australia Bank sank 6.4 per cent to A$24.35.
The IMF raised its estimate of losses tied to US loans and securitized assets to $1.4 trillion from $1.3 trillion two weeks ago. It cut its forecast for global growth next year to 3 per cent from an April prediction of 3.7 per cent.