Hundreds of billions of dollars were wiped off the value of global markets yesterday as panicked investors sent stock markets into a tailspin. The losses on Black Monday, as the carnage has been dubbed, have not been seen since the darkest days of the financial crisis, and the worst does not appear to be over, analysts warned.
Yesterday's falls on Asian and European markets were triggered by last Friday's fall in the Dow Jones Industrial Average, but there will likely be no respite today given the falls in the US.
At Monday's opening bell, the Dow fell 955.93 points, or 5.81 per cent, to 15,503.82; the S&P 500 lost 94.92 points, or 4.82 per cent, to 1,875.97; and the Nasdaq composite plunged 378.08 points, or 8.03 per cent, to 4,327.96.
Yesterday, the Singapore bourse sank 4.3 per cent to 2,843.39 - its biggest one-day fall since the 2008 global financial crisis. It is now within a hair's breadth of entering a bear market, having lost nearly 20 per cent since its year-high in April.
That was a mere flesh wound compared to the havoc in China, where Shanghai closed 8.5 per cent lower, Shenzhen fell 7.7 per cent and Hong Kong retreated 5.2 per cent.
In Japan, Tokyo shares were down 4.6 per cent while Taiwan slipped 4.8 per cent. Malaysia fell 2.7 per cent and Jakarta dived nearly 4 per cent. Global equities have lost more than US$5 trillion (S$7 trillion) in value since the yuan was devalued on Aug 11.
"You're seeing a lot of capitulation, people selling for the sake of selling and wanting to get out of the market," said Michele Santangelo, money manager at South Africa's Vunani Private Clients.
NRA Capital executive chairman Kevin Scully said: "This is a long overdue correction after a six-year bull run. Emerging markets haven't been doing well but there are no systemic risks. It's funds flowing out of emerging markets to the US markets."
The panic extended to currency markets. The embattled ringgit weakened briefly past the psychological level of 3 to 3.0166 to the Singdollar yesterday and a 17-year low of 4.2540 to the US dollar.
The Singdollar fell to as low as 1.4130 against the greenback yesterday while the rupiah slumped to 14,022 to the US dollar - its lowest since 1998.
Mr Chetan Ahya, managing director of Morgan Stanley Research, said the likelihood of another Asian financial crisis is "unlikely... but that does not necessarily mean Asia's macro outlook is in good shape. The persistent disinflationary pressures and the slow response from policymakers ... remain our topmost concern."
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