Asian markets crumble, Nikkei 225 dives 9.4%

Asian markets crumble, Nikkei 225 dives 9.4%
Hang Seng loses 8.2%, S&P/ASX 200 off 5%, Indonesia index slumps 10.4%
By V. Phani Kumar, MarketWatch

Last update: 6:01 a.m. EDT Oct. 8, 2008Comments: 394HONG KONG (MarketWatch) -- Asian markets crumbled Wednesday, as investors alarmed by a deteriorating financial markets situation dumped blue-chip stocks to raise cash, sending several indexes tumbling down to multi-year lows.

"It's not just the hedge-funds, everybody is selling ... And there are no buyers," said Dale Tsang, managing director at Imperial Dragon Asset Management Co. in Hong Kong. "There is a state of panic, for cash. Everybody needs cash."
"No, I haven't seen anything like this, and I don't think anybody has seen anything like this before, except those who are over 75 years old and have seen the Great Depression," Tsang added.


Japan's Nikkei 225 Average tumbled the most to close 952.5 points, or 9.4%, lower at 9,203.32 for its worst single-day percentage drop in years. The broader Topix index lost 8% to 899.01. Both benchmarks declined for a fifth straight session.
Toyota (TM:toyota motor corp sp adr rep2com
News, chart, profile, more
TM 65.11, -3.43, -5.0%) (JP:7203: news, chart, profile) stock lost 11.6% as shares of exporters were assaulted in the wake of a strengthened yen. The stock was also hurt by a Nikkei business daily report that the company's operating profit in the current financial year ending March 31 is expected to tumble 40% to about 1.3 trillion yen ($12.6 billion) as a deepening financial market turmoil hurts demand for automobiles.

NTDOY 40.00, -0.35, -0.9%) (JP:7974: news, chart, profile) plummeting 11.1%.
Hong Kong rate cut ignored
Hong Kong's benchmark index fell below its two-year lows, shrugging off the central bank's decision to cut interest rates by a full percentage point, a move designed to encourage banks to lend more actively to each other.
"I think the basic problem here is of confidence. We don't lack in liquidity, but most banks are keeping the available funds for themselves and not lending to others. That is what is happening everywhere in the world," said Y.K. Chan, strategist at Phillip Capital Management.

The Hang Seng Index finished 8.2% lower at 15,431.73, for its biggest single-day percentage loss since January 22, and its lowest finish June 14, 2006. The Hang Seng China Enterprises Index fell 8.3% to 7,731.68. Every single constituent of both indexes ended in the red.

The decline came even after the Hong Kong Monetary Authority Wednesday said it will cut the base rate -- the interest rate at which it lends to banks through its discount window -- by one full percentage point to 2.5% from Thursday, amid "stressful conditions in global financial markets."
"Central banks are applying the right medicine to the credit markets and are in the process of breaking a vicious cycle, but it's not broken yet," said Howard Gorges, vice chairman at South China Brokerages in Hong Kong. "People are waiting for further government action on possible recapitalization of banks."
Rest of region

The losses came after a sell off on Wall Street, as investors found little respite even after the Federal Reserve announced it would buy unsecured commercial paper in an effort to restart a market that has virtually shut down in recent weeks See full story and Fed Chairman Ben Bernanke opened the door for a possible interest-rate cut soon See full story.
Phillip Capital's Chan said coordinated action by central banks around the world will likely "be the next move."

"Even the Fed has indicated it will cut rates. I think most of the global central banks will cut rates," he said. "But the overall economy can't get better until the confidence improves and banks are willing to lend again."

In Taipei, the Taiex tumbled 5.8% to 5,206.40, its lowest level since July 2003.
China's Shanghai Composite gave up 3% to 2,092.22, while Australia's S&P/ASX 200 fell 5% to 4,388.10, a day after a higher-than-expected one percentage point cut in interest rates by the country's central bank lifted the index 1.7%.