Asian, European Stocks Plummet
Friday, October 10, 2008; 8:24 AM
TOKYO, Sept. 10 -- Punctuating its worst week in history, Japan's main stock index plummeted nearly 10 percent Friday, as a mid-size Japanese life insurance company went bankrupt and fear-driven selling drove markets down across Asia.
"It is as if the bottom has fallen out of a bucket," Kazuyoshi Kaneko, Japan's transportation minister told reporters.
The selling fever that pushed New York's Dow Jones average down by 7.3 percent on Thursday also spread to Hong Kong, Singapore, the Philippines, India and Australia, where markets all declined by about 8 percent. Losses in China and South Korea were smaller, with stocks down 4.65 percent in Shanghai and 4.1 percent in Seoul.
"It is necessary to deal with this situation now," said Japanese Prime Minister Taro Aso, who instructed his government on Friday to put together an emergency spending program to revive the country's economy, which began shrinking in the second quarter of this year.
It is expected to include public works projects, tax cuts and support for troubled small and medium-sized companies. The Bank of Japan added another $45.2 billion dollars to the liquidity of Tokyo money markets. Its was the central bank's 18th consecutive day of emergency cash injections.
But like other recent central bank efforts around the globe to unfreeze credit and cut interest rates, government moves here failed to halt investors from selling.
The benchmark Nikkei 225 index has lost almost a quarter of its value in the past five days, a record decline for an index created in 1949. The broader Topix index fell 20 percent in the past week, also a record.
Rapidly falling stocks on Friday forced a brief suspension of some trading in Tokyo and Osaka. It was apparently the first such trading freeze since the terrorists attacks of Sept. 11, 2001.
Elsewhere in Asia, Indonesia, which had halted stock trading earlier this week after market values fell 10 percent in one day, suspended trading indefinitely on the Jakarta Stock Exchange, according to the Associated Press. In India, the central bank cut the amount of cash that banks must keep on hand, a move that released about $12.2 billion.
The market open was delayed in Russia and Austria, while the exchange in Iceland -- a nation that has nationalized much of its banking system in recent days-- remained closed.
To give emergency loans to nations overwhelmed by the financial crisis, Japan is planning to make a proposal at the Group of Seven meeting of finance officials in Washington this weekend, according to Japanese Finance Minister Shoichi Nakagawa.