Asian markets sink deeper

Kospi plunges by 7% while Singapore & Sydney registers losses of around 4%

The stock markets across the Asian region closed sharply lower after Wall Street extended its losses for a second day on growing recession fears. On Wall Street, the Dow Jones Industrial Average ended the day down by 514 points, to 8,519. The Nasdaq Composite Index finished lower by 80 points at 1,615. S&P 500 finished lower by 58 points at 896.78.

In commodity market, crude oil rose in New York, rebounding from a 16-month low before the Organization of Petroleum Exporting Countries meets to discuss production cuts. Crude oil for December delivery rose as much as $1.06, or 1.6 percent, to $67.81 a barrel on the New York Mercantile Exchange. It was at $67.51 a barrel at 10:42 a.m. Singapore time. Yesterday, crude oil futures fell $5.43 to $66.75 a barrel in New York, the lowest settlement since 13 June 2007.

In the currency market, the U.S. dollar traded in the mid 97-yen levels in late Tokyo deals. The dollar was quoted at 97.64-97.66 yen compared to Wednesday's late quotes of 99.29-99.31 yen in Tokyo.

The Australian dollar closed lower for the third consecutive day. The Aussie finished the session at US$0.6669-0.6673, down from Wednesday's close of US$0.6687-0.6692.

The New Zealand dollar managed to rise after the central bank cut the official cash rate to 6.5%. The kiwi, which was trading at around US$0.5830, rose to a high of US$0.5975 after the rate cut, before retreating to finish the domestic session at US$0.5904 compared to US$0.6020 late Wednesday.

The won extended its losses, hitting a 10-year low against the U.S. dollar. The local unit finished the domestic session at 1,408.8 a dollar, down from Wednesday's close of 1,363.0 a dollar.

The Philippines peso fell sharply against the US dollar on Thursday morning in Asia, continuing to linger around an 18-month low. The peso tumbled to a low of 49.01 against the US dollar today. The currency moved sideways thereafter and is currently trading at 49. The dollar-Philippine peso pair closed yesterday's deals at 48.675.

The Taiwan's dollar dropped to a 17-month low on concern the island's electronics exports may shrink as global demand slows. The currency weakened as much as 1.3 percent to NT$33.408 against the U.S. dollar, the lowest level since May 2007.

Coming back in equities, the Japanese stock market extended its losses for a second day, with the key Nikkei average hitting its lowest point since May 2003. However, the market pared its losses following a report that the U.S. administration might consider a $40 billion proposal to help stop foreclosures. A stronger yen also hit market sentiment, as Japanese exporters became less competitive overseas. The benchmark Nikkei Stock Average closed down 213.71 points or 2.46% at 8,460.98, recovering from a more than 7% slump in early trade. The broader Topix index of all First Section issues lost 17.53 points or 1.97% to 871.70.

Early in the day, the Ministry of Finance said that Japan's merchandise trade surplus fell to 95.1 billion yen in September, plummeting 94.1% on year. That was sharply lower than analysts' expectation that called for a decline of 33.9%. In August, the surplus was 327.56 billion yen. Imports soared 28.8% on year, while exports were up an annual 1.5%.

The Ministry of Finance also announced weekly numbers for capital inflow of stocks and bonds. Residents of Japan remained net buyers of foreign stocks last week and became net buyers of foreign bonds and notes. Foreigners, meanwhile, were net sellers of Japan-based stocks, bonds and notes. Japan residents bought a net 348.4 billion yen worth of foreign stocks for the week of October 12-18, and bought a net 113.6 billion yen in overseas bonds and notes. Foreign residents, meanwhile, sold a net 300.1 billion yen in Japanese stocks for the week, and were sellers of a net 792.2 billion yen in Japan bonds and notes.

The Chinese stock market closed lower amid a fresh wave of sell offs in global markets. The benchmark Shanghai Composite Index closed lower for a third day, falling 20.26 points or 1.07% to 1,875.56 while the Shenzhen A-share Index gained 3.91 points or 0.76% to 514.56.

In Hong Kong, the Hang Seng Index dropped below the psychologically crucial 14,000-point level for the first time since July 8, 2005. The Hang Seng Index fell by 506.11 points or 3.5% to 13,760.49, while the Hang Seng China Enterprises Index slumped by 297.72 points 4.4% to 6,403.15.

On economic front, Hong Kong’s overall consumer prices rose by 3.0% to 6.1% in September 2008 over a year earlier. The year-on-year rates of change in the CPIs in September 2008 were affected by three Government's one-off relief measures, including the Government's payment of three month's public housing rentals, two years' suspension of Employees Retraining Levy and the granting of electricity charge subsidy. These three one-off measures had together lowered the year-on-year rate of increase in the Composite CPI for September 2008 by 3.1%. Netting out their effects, the year-on-year rate of increase in the Composite CPI in September 2008 (i.e. the underlying inflation rate) was 6.1%.

The Australian stock market closed sharply lower, extending yesterdays' 3.4% losses. The benchmark S&P/ASX 200 index closed down 181.7 points or 4.4% at 3,974.4 in a late sell-off. The broader All Ordinaries index lost 180.8 points or 4.4% to 3,939.3.

On the economic front, home buying in Australia became slightly more affordable during the three months to September 2008, according to a survey from the Housing Industry Association and Commonwealth Bank of Australia. The group's First Home Buyer Affordability Index improved by 3.0% for the September quarter. The index remained at near record lows, at 1.1% below the level of the September 2007 quarter.

The New Zealand stock market ended in the red, despite the interest rate cuts by the Reserve Bank of New Zealand today. The benchmark NZX 50 plummeted 3.18%, or 92.05 points, to 2807.339. The NZX 15 plunged 3.58%, or 186.5 points, to 5020.432.

The Reserve Bank of New Zealand today reduced the Official Cash Rate (OCR) from 7.5% to 6.5%. The central bank's Governor Alan Bollard commented that the ongoing financial market turmoil and the deteriorating outlook for global growth have played a large role in shaping today's decision.

The South Korean stock market fell for the third straight session, with the benchmark Korea Composite Stock Price Index or Kospi tumbling 7.5% or 84.88 points at 1,049.71 -its lowest level in more than three years amid fears of a global recession. The key index, which sank more than 9% in early trade, recovered some of the losses as the National Pension Service, the country's state pension fund, picked up stocks. Program selling was halted for five minutes in the morning due to heavy selling in futures.

In Philippines, the Philippines stock market sunk 4.63%, heading for its lowest close since 24 October 2005. The benchmark index PSEi skid 4.63% or 97.09 points to 1,995.92. The composite index was dragged down as scared investors sold their stocks as overseas markets suffered another heavy blow on fears of spreading global recession.

In Taiwan, Taiex continued to remain below the key 5,000 points level breaching the previous five-year low level. The weighted index closed down 132.08 points or 2.72% at 4,730.51 - the lowest level since 3 June 2003 when it ended at 4,678.08 points.

Apart from global financial problem local investors were also inclined to be extra cautious ahead of a massive anti-government demonstration by pro-independence activists on Saturday. The rally is being mounted ahead of a visit to Taiwan by chairman Chen Yunlin of China's Association for Relations Across the Taiwan Strait, which is authorized by Beijing to handle civilian exchanges with Taipei in the absence of official contacts. Chen's upcoming visit has taken on extra weight since his deputy, Zhang Mingqing, was jostled and shoved to the ground by anti-China activists during a visit to the island earlier this week.

In Singapore, the Strait Times was trading lower by 57.83 points or 3.18% at 1,763.30. On the economic front, Singapore's annual inflation accelerated to an expected 6.7% in September on higher food and housing costs, but below a 26-year high of 7.5% seen throughout the second quarter. Arising from higher accommodation costs and electricity tariff, housing cost advanced by 14.6%. Food prices increased by 8.2% following dearer cooked food, rice and other cereals, fresh poultry, seafood, cooking oils, fresh vegetables and milk products.

In India, a strong rebound was witnessed on the bourses in mid-afternoon trade on Finance minister P Chidambaram’s comments that the stock market regulator Securities & Exchange Board of India (Sebi) has asked foreign institutional investors (FIIs) to reverse short positions on borrowed shares. The market, however, soon slipped into the red again. At 15.30 IST the BSE Sensex was down 372.66 points or 3.66%.

In other regional markets, European shares opened lower. The German DAX 30 index lost 2% to 4,479.14, the French CAC-40 index fell 1% to 3,264.34 and the U.K. FTSE 100 index lost 0.9% to 4,004.13

Meanwhile according to the data release by the national statistics of U.K the British retail sales volumes fell in September and the annual rate of growth slowed to its weakest in 2-1/2 years, showing consumers struggling as the economy slows. The Office for National Statistics said sales fell 0.4 percent last month, after a revised 1.1 percent gain in August, taking the annual rate down to 1.8 percent from 3.3 percent, the weakest since February 2006.

Looking ahead the day is scheduled to release industrial orders data from Euro zone which will be followed by weekly data on Jobless claims from US bureau of labour. In the evening we will get housing price index for the month of August. In the late evening the Bank of Canada will release it monetary policy report.