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The Honolulu Advertiser

Posted on: Wednesday, September 12, 2001

America's bloodiest day

Asian stocks plummet as confidence shaken

Bloomberg News Service

SYDNEY — Asian stocks tumbled in the wake of the terrorist attacks, led by companies that have businesses in the United States.

Japan's Nikkei 225 stock average fell 5.4 percent to 9735.16, its first drop below 10,000 since August 1984, after trading was delayed by 30 minutes. Hong Kong's Hang Seng Index plunged as much as 10 percent, while Singapore's Straits Times Index dropped more than 8 percent. Korea delayed the opening of its market by three hours while Taiwan, Malaysia and Thailand suspended trading.

"This will shake consumer confidence in the U.S. and the risk of a recession is much greater now,'' said Jason See, chief investment officer at OUB Asset Management Ltd., which manages $2.1 billion. "The damage is devastating and may take several months for confidence to return."

Airline stocks tumbled on concerns that the attacks may continue to delay flights. Qantas Airways Ltd., Australia's largest airline, fell 13 percent. Singapore Airlines Ltd. plunged 10 percent. Cathay Pacific Airways Ltd. fell 13 percent after Hong Kong's only long-haul airline diverted or canceled all U.S.-bound flights.

"This is yet more bad news for the global equity markets," said Takashi Saito, who helps manage about $840 million in Japanese equities for Nikko Global Asset Management Ltd. in London. "Especially at a time when investors are waiting for more indicators for any signs of economic recovery, events like this can stall growth altogether."

Tokyo losses were kept in check as the Bank of Japan added an extra $16.8 billion into Japan's money markets to help keep markets functioning in the wake of the worst terrorist attack in U.S. history.

Still, Honda Motor Co. and other exporters fell. Honda slid 5.2 percent. Toyota Motor Corp. lost 4.1 percent.

In Australia, News Corp., which makes more than three-quarters of its profits in the United States, fell 5.6 percent.

Declines in Hong Kong, Asia's second-biggest market, were unmatched across the region. The Hang Seng Index opened down 7.3 percent and lost as much as 10.3 percent. Thirty-six stocks on the exchange fell to 52-week lows.

"Hong Kong may face more selling pressure as some other Asian markets are closed and people can't raise cash," said James Cheng, a director at Asia Strategic Investment Management Ltd., which manages $60 million.

Legend Holdings Ltd. and Johnson Electric Holdings Ltd. paced declines in Hong Kong. Legend, China's biggest personal computer maker, lost 12 percent.

"We do expect more volatility in the market and we hope that the small investors will be particularly cautious," said Hong Kong Acting Financial Secretary Stephen Ip.

Singapore's benchmark Straits Times Index on plummeted 136.64 points, or 8.7 percent, to 1,430.12 just after opening.

"It might have been better to close, and open when some semblance of order has been established," said Song Seng Wun, regional economist for GK Goh Research in Singapore.

"We're still trying make sense of a very chaotic situation," Song said. "Walking down the streets just now, having my coffee, everybody around me was shocked and stunned, reading the papers."

In currency markets, the dollar shed 0.3 percent to 119.07 yen and traded at 90.99 U.S. cents against the euro, compared with 91.31 in late New York trading.

Oil stocks gained on expectations the attacks could lead to a disruption of oil supplies from the Middle East.

Among gainers, Woodside Petroleum Ltd., Australia's second- biggest oil producer, rose 2.5 percent. Santos Ltd., the nation's third-largest oil producer, gained 2.4 percent.

Gold shares also got a lift as investors sought the safety of the commodity.

Lihir Gold Ltd. gained 5.4 percent. Delta Gold Ltd. rose 5 percent.