Two Crises Shake Foreign Stock Markets; Fears About Asian Woes, Russian Debt Spur Decline; Dow Falls 175 but Rebounds
A fresh wave of selling swamped overseas financial markets yesterday, as investors worried that the Asian economic crisis is worsening anew and that Russia is nearing the brink of default on its foreign debts.</br></br>The plunge in stock prices hit financial centers from Hong Kong to Frankfurt to Johannesburg, evoking memories of the globe-girdling flight of capital that devastated markets last fall. Yesterday's sell-off initially hit U.S. stocks, too, with the Dow Jones industrial average down as much as 175 points at midday before rebounding to close down just 27 points.</br></br>Among the hard-hit markets yesterday were Hong Kong, where the main stock index fell 5.3 percent; Indonesia, where stocks tumbled 3.9 percent; and Frankfurt, where share prices skidded about 3 percent. In Eastern Europe, which is closely tied economically to Russia, Polish share prices fell 3 percent to a four-month low and Hungarian stock prices dropped 3.4 percent to the lowest level since December.</br></br>In early trading today in Asia, market indexes were mixed. South Korea's key stock index rose 4.2 percent, Japan's gained 1.4 percent and Hong Kong's was up fractionally. Singapore, Malaysia and Indonesia markets were lower.</br></br>The darkest storm cloud hangs over Russia, whose main stock index plummeted another 10.5 percent yesterday, bringing its losses this month to 40 percent. In response, the Russian government tripled short-term interest rates yesterday to 150 percent in a desperate attempt to make investments in the country more attractive and keep the ruble stable. {Details, Page A30.}