Asian Markets Plunge as Fears of Global Recession Looms | Voice of America - English
Indonesia's stock index plummeted more than 10 percent in one of the worst days of trading ever seen in Asia.  In Tokyo, the key index closed more than nine-percent lower, the worst trading day since the global stock market crash in 1987.  Katie Hamann reports from Jakarta.
Asia's share markets plunged Wednesday. In Indonesia, the key stock index in Southeast Asia's largest economy crashed 10.4 percent in response to a government interest rate increase, falling commodity prices and rising inflation. Late in the morning, the Jakarta Stock Exchange suspended trading for an indefinite period. Exchange officials say the suspension was justified because stocks have fallen more than 20 percent in three days. Purbaya Yudi Sadewo is the senior economist with local firm Danareksa Securities. He says the interest-rate increase went against the global trend and created a panic about the availability of cash for companies to borrow. "That gave a signal to the market that they are likely to tighten liquidity conditions further," he said. "Although under the current condition the banking system is already experiencing very tight liquidity. So to me the central bank action is out of sync with the reality. That is why we experience the worst fall in the stock market today." Despite efforts by regional governments to bolster markets by adding cash to the financial system or cutting interest rates, investors fled markets out of fear of a severe global recession and a worsening credit crisis. In Japan what was described as indiscriminate panic selling sent the Nikkei crashing. It lost 9.4 percent, closing at its lowest point in nearly five years. It was the largest single-day decline since the global market crash in October 1987. The government pumped nearly $21 billion into money markets, marking 16 straight days of intervention. The yen, however, surged on the back of plunging equity prices. Japan's currency is emerging as a solid favorite with investors. In Hong Kong, the government attempted to arrest the run by cutting interest rates by one percentage point. But the Hang Seng index still fell eight percent to a 28-month low. The index is down nearly 52 percent since its record high a year ago. Financial and telecommunications stocks led the fall on the Shanghai Composite Index, which closed three-percent lower. Selling went on throughout the day, despite media reports that the government might soon cut interest rates. The main indexes in both South Korea and Taiwan lost nearly six percent in the selling. And Mumbai's leading index was off more than four percent in late trading.