WORLD> Global General
Recession specter haunts markets
(China Daily)
Updated: 2008-10-28 10:00

A man eats his breakfast before an information screen at a brokerage house in Beijing October 27, 2008. China's main stock index sank more than 3 percent on Monday to its lowest in two years, led by large caps on worries about lower-than-expected corporate earnings and weakness in overseas markets. [CFP]

"Markets are gripped by fear," said Benjamin Collett, head of hedge fund sales trading at Daiwa Securities SMBC Co. "You actually feel sick watching this move."

In Tokyo, the Nikkei 225 index closed down 6.4 percent to 7162.90 - the lowest since October 1982 - with exporters like Toyota Motor Corp and Sony Corp hit hard because of the surging yen.

The flight of shell-shocked investors from emerging markets and massive unwinding of investments in higher-yielding but riskier assets, has propelled the yen - a funding currency of choice for such deals - to multi-year highs.

The Group of Seven warned yesterday that the rising yen posed a threat to financial and economic stability, the latest coordinated effort by the world's richest nations to curb the worst financial crisis in 80 years.

A brief G7 statement said the yen's rapid 12 percent ascent against the dollar threatens Japanese exports as the world's second-largest economy lurches toward recession.

"We are concerned about the recent excessive volatility in the exchange rate of the yen and its possible adverse implications for economic and financial stability," the group said.

Elsewhere in Asia, stocks in Taipei, Australia, the Philippines, Indonesia, Thailand and India closed sharply down.