Asian Markets Sink as Investors React To Bear Stearns Sale and Fed Action
HONG KONG -- Asian markets tumbled in early trading Monday as investors reacted to the latest wave of bad news in the credit markets, after J.P. Morgan Chase & Co. agreed to buy Bear Stearns Cos. for $2 a share, and the U.S. Federal Reserve cut the discount rate by a quarter percentage point.</br></br>In Tokyo, the Nikkei 225 Stock Average lost 4.2% to 11726.99, dropping below 12000 for the first time since August 2005. Shares of exporters were hit particularly hard, with Toyota Motor Corp. and electronics maker Hitachi Ltd. slumping early, and Mitsubishi UFJ Financial Group and other banks hit as well. The dollar weakened to its lowest level in more than 12 years, trading below 97 yen to the dollar.</br></br>Hong Kong's Hang Seng index dropped 4.7% in the first 15 minutes of trading, to 21,189.85, while the Shanghai Composite fell 1.9% to 3889.19.</br></br>Jing Ulrich, chairman of China equities for J.P. Morgan Securities here, noted that Asian markets are still closely tied to those in the U.S.</br></br>"The mainland Chinese markets are also under some pressure these days, because of oversupply of shares in the markets from recent IPOs and the release of locked-up state-owned shares," she said. "The confluence of those factors is contributing to today's weakness in the Chinese markets."