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Panicked Asian investors dump stocks on US fears today.

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01/18/2008 09:41 PM
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Panicked Asian investors dump stocks on US fears today.
TOKYO -- Asian shares tumbled in early trading Friday as panicked investors dumped stocks after Wall Street set the lead and plummeted to fresh lows on intensifying recession fears, dealers said.

Japan's finance minister called for calm, and markets seemed unmoved by US President George W. Bush's plan to unveil a stimulus plan Friday following more grim economic news.

The Tokyo Stock Exchange's benchmark Nikkei-225 index dropped 2.81 percent at the end of its morning session, putting the Tokyo market on course to close at its lowest point since October 2005.

Hong Kong share prices slumped 3.5 percent in opening trade. Losses in Shanghai, which have been seen as relatively insulated from US economic troubles, were capped on expectations of strong earnings among large Chinese banks. The benchmark Shanghai Composite Index fell 0.19 percent.

Seoul and Taipei were both down about two percent while Singapore shares slid 3.0 percent by mid-morning.

Australian stocks, already marking their worst ever start to a year, plunged about 2.6 percent shortly after opening.

"People are panicking. We are seeing a lot of unwinding of carry trades," said Andre Clarke, sales trader at SG Securities in Hong Kong.

In Taipei, President Securities analyst Johnny Lee also reported "panic selling" after the local market opened.

"Market sentiment is overwhelmed by fear," said Ben Kwong, chief operating officer at KGI Asia Ltd in Hong Kong.

"Investors are overly concerned about the subprime crisis, which could weaken the US economy and the global economy as well."

US shares plummeted to fresh lows Thursday as bleak data on housing and manufacturing and a massive loss from investment and brokerage firm Merrill Lynch fanned recession fears and prompted investors to run for cover.

United States President George W. Bush scheduled an announcement Friday on "short-term, temporary measures" to stimulate an economy buffeted by housing and credit woes, a spokesman said.

Ben Bernanke, chairman of the US Federal Reserve, on Thursday backed the idea of a temporary stimulus package and talked of the need for swift action.

Bernanke indicated a stimulus effort could complement the Fed's actions in slashing interest rates to offset the impact of economic woes that, according to some analysts, could provoke a recession.

But dealers said Bernanke's congressional testimony failed to reassure markets and instead fanned concern about the direction of the world's largest economy.

"I could not detect strong willingness on the part of the Fed chief to ward off a recession at a time when the economy, as seen by recent economic data, is decelerating," said Yoshikiyo Shimamine, chief economist at Dai-Ichi Life Research Institute.

As share prices plunged, Japanese Finance Minister Fukushiro Nukaga urged markets not to over-react.

"At this stage, we shouldn't make a knee-jerk reaction," Nukaga told reporters, adding "there are various factors that move the markets."

"We need to look carefully at economic indicators and observe the effects of the US subprime mortgage issue and high crude oil prices," Nukaga said.

Subprime loans flourished at the end of a US housing boom as lenders offered mortgages to people with shaky credit. A subsequent wave of defaults left US and global banks with billions of dollars in losses, leading to tighter credit which squeezed consumer and business spending, threatening the overall economy.

Asian banks were among the losers, with HSBC sliding 3.80 Hong Kong dollars or 3.2 percent to 115 and Mizuho Financial Group down 12,000 yen or 2.5 percent to 471,000 in Tokyo.

A strengthening yen against the dollar also soured the mood in Tokyo. Japanese exporters benefit from a weak currency.
[link to business.inquirer.net]
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01/18/2008 09:42 PM
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Re: Panicked Asian investors dump stocks on US fears today.
Gold rush" grabs Chinese as prices hit new high

www.chinaview.cn 2008-01-19 09:07:08 Print

BEIJING, Jan. 19 (Xinhua) -- The appeal of gold as an alternative investment is increasing in China as its price hits new highs and is forecast to keep rising in the mid to long term.

Stimulated by expectations of U.S. interest rate cuts and soaring global oil prices, gold reached an all-time high earlier this month. Citibank estimated its price is expected to hit 1,000 U.S. dollars an ounce this year.

The strong upward trend has attracted individual Chinese investors such as Yao Yun. The chief financial officer of a Shanghai-based foreign company bought 50,000 yuan (6,849 U.S. dollars) in gold bars and the price has risen by 12 yuan per gram in just half a month.

"I believe the price will keep rising," he said. "The stock market is too volatile, and the real estate sector is subjected to macro-control. Investing in gold is a good choice at this time."

In Caishikou Department Store, a popular physical gold dealer in Beijing, more than 100 people lined up to purchase bullion for the Lunar Year of the Mouse on Nov. 22, the first trading day of the products. More than 200 kilograms of the gold bars were sold within 1.5 hours. Moreover, the total subscription amounted to two tons.

Li Xiang, a manager of the department store, said sales of gold products surged more than 50 percent to 2.38 billion yuan in 2007.

Zhongjin Gold Cooperation Limited, a leading gold products manufacturer in the country, said its bullion sales had kept a steady growth of 50 percent month-on-month since July.

Paper claims to physical gold, which allows customers to use money in their bank accounts to virtually buy and sell gold at global prices, are also appealing to more domestic investors as well as speculators.

Recent figures from the Bank of China (BOC) Shanghai branch show that the transaction volume of "paper gold" reached 140 million yuan last week, 30 percent higher than in the flat period before gold started rising.

"Paper gold has entered the vision of more individual investors recently because of the wide range of price fluctuation," said Xu Ming, a gold analyst at the BOC Shanghai branch.

China Gold Association statistics revealed that gold investors nationwide have exceeded 1 million. The number doesn't include speculators of gold futures, which made a strong debut in Shanghaion Jan. 9.

On that day, China gold futures contracts surged to the daily 10 percent limit minutes after trading started at 9 a.m. on the Shanghai Futures Exchange (SFE). More than 6,000 clients traded on the market.

Experts believe the China gold futures market will grow into a leading global market as it was launched at a time when international gold prices have repeatedly been hitting new highs. Global prices jumped more than 30 percent throughout last year, representing the biggest increase since 1979.

Editor: Wang Hongjiang