Reply #24: asia: Asia joins rout

[xchrom]

http://www.atimes.com/atimes/Asian_Economy/MH06Dk01.html

MONTREAL - The global rout of stocks that drove the Dow Industrial Average Index down 4.3% on Thursday continued into Asia on Friday, with Hong Kong's Hang Seng Index crashing more than 5% at one point and other leading markets dropping by similar amounts before a recovery cut losses late in the day.

Taiwan's Taiex Index fell by 5.58% and the Nikkei 225 in Tokyo dropped by 3.72%, as did Seoul's Kospi Index, much of the declines happening within minutes of the market openings. As Asian markets closed, Europe continued the trend, with the London FTSE 100 dropping 2.6% in early trading.

Behind the panic sell-off, surprising many investors who looked for a rally after resolution of the debt ceiling debate in the United States, was concern that governments are seen to have few tools


left to resolve the continuing debt crisis in Europe and to reinvigorate the sluggish US economy. Other factors, such as deleveraging by hedge funds, also played into the steep declines.

Yet while the Friday action in Asia gave the appearance of a rout, in fact it was relatively orderly in its own way: volatility on Friday and on the week was extremely highly correlated (+0.98) with percentage negative move. A certain degree of regional and even intra-regional stratification, particularly in Northeast Asia and the Greater China sub-regions, also remained in evidence.