The Tokyo stock market began the new week with another substantial decline, while the Hong Kong Stock Exchange plunged about 30 percent in the first hour of trading today.
The Hong Kong market lost almost 850 points despite the announcement last night of a $256 million bailout package aimed at preventing a collapse under a threatened wave of investor defaults following last week's market plunge.
After one hour of trading Monday, the Hang Seng Stock Index in Hong Kong stood at 2,512.87, or 849.52 points off the close of the last trading session Oct. 19.
Futures trading in Hong Kong was suspended after 15 minutes.
In trading in Japan, the Tokyo market's best-known indicator, the 225-share Nikkei stock average, closed 1,096.22 points down at 22,202.56 a drop of more than 4 percent. It was the third largest one-day decline of the Tokyo market.
U.S. investors were looking to the stock markets in Tokyo and Hong Kong for the first indications of how the world's markets would fare following last week's volatility.
Trading on both the stock and futures exchanges in Hong Kong was suspended last Tuesday, a day after that stock market's leading price index plunged a record 420.81 points to 3,362.39 in reaction to huge downturns on Wall Street and elsewhere.
The collapse triggered a sharp drop in the prices of futures contracts, and many investors with large holdings of the contracts were in danger of default. As the week wore on, fear grew that the futures exchange -- the world's second largest -- would collapse if investors were allowed to default.
Hong Kong's financial secretary, Piers Jacobs, said yesterday that to help prevent a crisis, a support package amounting to 2 billion Hong Kong dollars -- the equivalent of $256 million -- had been created to enable the Hong Kong Futures Guarantee Corp. Ltd. to cover any defaults.
Jacobs said the government's decision to help the futures exchange was based on the need to maintain Hong Kong's reputation as an international financial center and to protect the stock exchange from selling pressures caused by a lack of confidence in the futures market.