Asian markets slump

Dealers in emerging economies also ran for cover with the US Federal Reserve in focus amid fears it will soon start to reel in its US$85 billion a month bond buying. Tokyo’s Nikkei crumbled, losing 6,35 percent or 843,94 points to 12 445,38 as dealers were spooked by a slumping dollar. The index has lost 20 percent since hitting its peak last month, putting it in a bear market.

Hong Kong shed 2,19 percent, or 467,62 points to end at 20 887,04 while Sydney ended 0,61 percent lower, giving up 28,7 points to end at a five-month low of 4 695,8. Seoul skidded 1,42 percent or 27,18 points to finish at 1 882,73.

Shanghai tumbled 2,83 percent or 62,54 points to 2 148,36 in its first session since weak trade and investment data at the weekend reinforced fears about a slowdown in the world’s number two economy. Chinese markets were closed for three days for a public holiday.

In emerging economies foreigners removed cash they had invested on the back of the Fed’s money printing splurge as they sought better returns than in the West.
Manila, which last month sat at record highs dived 6,75 percent or 442,57 points to end at 6 114,08 while in late trade Bangkok tumbled 3,83 percent and Jakarta was 1,40 percent down.

Sentiment has been battered this week after Japan’s central bank held off unveiling any new monetary easing measures. The resulting plunge in Japanese stocks indicates cracks could be starting to appear in the market’s faith in Prime Minister Shinzo Abe’s big spending plan to lift the troubled economy.

It also reignited traders’ fears which have been growing for several weeks about the so-called quantitative easing by the Fed as the US economy shows signs of improving.
Fed chief Ben Bernanke unveiled the scheme in September, saying the bank would continue to print money until the world’s biggest economy was strong enough to stand on its own two feet.

Japanese stocks took the brunt of yesterday’s hammering as the yen extended its gains against the dollar.
“The long talked about issue of what happens when the Fed tapers quantitative easing does seem to be being priced into stocks right now,” Mike McCudden, head of derivatives at Interactive Investor.

“And given the boost lax monetary policy has given markets this year then there’s plenty more room on the downside,” he told Dow Jones Newswires. – AFP.