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IT WAS another day of panic and plunging share markets across Asia yesterday as shock waves from the Bear Stearns fire sale in the United States crashed home.
Investors dumped shares amid a growing air of crisis in the global economy, heightened by the collapse of the US' fifth-largest investment bank and reinforced by oil's surging price and the free-falling greenback - now at a 13-year low against the yen.
The US Federal Reserve did not calm nerves either by making an emergency cut in the discount rate - the level it charges banks to borrow.
A dealer in Singapore said: 'Regional investors are spooked by fears that more US banks could be hit by the credit crisis that struck Bear Stearns.'
Blood was flowing all day - Australia lost 2.3 per cent, Shanghai slumped 3.6 per cent, Japan's Nikkei Index shed almost 4 per cent and is now near a three-year low, while Hong Kong went off the cliff, slipping 5.2 per cent.
Mr Peter Lai, a director at DBS Vickers in Hong Kong, told Agence France-Presse: 'The panic selling was mainly from individual investors, though some institutions also joined the spree.'
It was slightly less painful in Singapore, with the Straits Times Index (STI) falling nearly 100 points before recovering to close down 46.26 points at 2,792.75.
The STI has not seen that number since December 2006 and is down nearly 20 per cent for the year.
'Until we get past all these uncertainties, it'll be hard for Asian markets to recover and perform,' said DBS Vickers Securities head of equity research Timothy Wong.
The source of the mayhem yesterday was again Wall Street, which fell sharply last Friday on the shocking news that Bear Stearns was on life support.
An announcement that JPMorgan Chase had snapped the investment bank up for a song yesterday failed to halt market talk that another industry giant - Lehman Brothers - could also be in trouble.
Deutsche Bank Private Wealth Management's chief Asian strategist, Mr Marshall Gittler, noted: 'The speed, breadth and depth of the evolving credit crisis mean that risks to the US economy remain distinctly on the downside.'
Financial institutions are in the spotlight and they took a hammering in Hong Kong, where HSBC Holdings, which has significant US exposure, lost 3.9 per cent.
Yet Singapore banks emerged relatively unscathed - they are seen as comparatively safer havens as they get most of their earnings from the local loans market.
DBS Group Holdings lost 16 cents to $16.70, United Overseas Bank dropped eight cents to $17.16, while OCBC Bank retreated seven cents to $7.52.
The Singapore Exchange also took a tumble, falling 37 cents to $6.43 - its lowest level in nearly a year.
While the STI fell 1.6 per cent, the selldown was steeper in the broader market.
The FTSE ST Mid Cap Index dropped 2.4 per cent to 705.06 points, while the Small Cap Index shed 2.7 per cent to 611.96. The China Index dived 5.3 per cent to 398.74.
While most investors are nursing their wounds on the sidelines, the brave few may consider bottom-fishing or bargain hunting.
Mr Wong said: 'If your investment horizon is one to three years, now is a good time to look for good quality names that you can pick up at attractive valuations.'
AmFraser Securities senior vice-president of research Najeeb Jarhom said: 'With local economic and corporate fundamentals remaining strong, there's no reason why the STI will go lower than 2,500 to 2,600.'
alfoo@sph.com.sg
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