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Markets crash: How panic spread around the globe
High anxiety at the Frankfurt stock exchange. Photograph: Kai Pfaffenbach/Reuters
Stockmarkets around the world slumped today as fears of a global recession deepened. After Wall Street fell to a five-year low of 8579 last night, down 7.3% on the day, the rout started in Asia, where Singapore slid into recession, and quickly spread to Europe. In London, the FTSE 100 plunged more than 10% in early trading, and Wall Street is expected to open 306 points lower.
Asia-Pacific
New Zealand
New Zealand's benchmark NZX-50 index fell 4.7%, its biggest one-day fall since October 24 1997, at the height of the Asian financial crisis. The index closed down 139 points at 2,805, its worst performance in six consecutive days of declines. Over the past six trading days the market has shed 427 points, or 14%.
Australia
Australian market watchers called it "Black Friday". In Sydney, the benchmark S&P/ASX200 plummeted 8.34%, or 360 points, to close at 3,960, its biggest one-day percentage loss ever. Together with the 8.2% plunge on the broader All Ordinaries index, today's session wiped A$106bn (£41bn) from the value of stocks. Nearly every stock fell.
Japan
Tokyo's Nikkei plunged 9.6% today to end its worst week in history. It lost nearly a quarter of its value this week. The index tumbled 881 points to 8276, its lowest level since May 2003. It was the biggest one-day percentage fall since the stock market crash of October 1987. At one stage the Nikkei was down more than 11%, and the slump prompted the Tokyo bourse and the Osaka Securities Exchange to briefly suspend some futures and options trading during the morning.
Yamato Life Insurance went bankrupt, the first major Japanese financial firm to collapse in the wake of the global credit crisis. Cash was king, with even Japanese government bonds being liquidated for funding. The Bank of Japan pumped ¥4.5 trillion (£26.97bn) into the money markets to ease liquidity. The yen, regarded as a safe-haven currency, jumped to a three-year high against the euro and a seven-year high against the pound.
South Korea
The Seoul Composite index dropped 4.1% to 1,241 points.
China
The Shanghai Composite index fell 3.6% to 2,000.
Hong Kong
The Hong Kong stockmarket closed on a three-year low. The benchmark Hang Seng index was down 1146 points, or 7.2%, to 14,796 after falling by more than 9.5% at one point. It is the first time the index has fallen below the 15000-level since January 2006.
Singapore
News that Singapore slid into recession for the first time since 2002 drove the Straits Times index lower by 162 points, or 7.7%, to 1940. The economy shrank 6.3% during the third quarter. Singapore's central bank responded by easing monetary policy for the first time in five years.
Taiwan
Markets were closed for a national holiday.
Indonesia
Share trading was suspended for a third day.
India
India's central bank slashed its cash reserve requirement to free up some $12bn in funds and ease a squeeze that drove overnight rates in money markets to a 19-month high and forced the government to cancel a bond auction. The rupee hit an all-time low and the main stock index plunged more than 9%.
Middle East
Egypt
The Egyptian stockmarket fell 4.6% to 1,993 points, after plunging 16.4% to a two-year low on Tuesday.
Israel
The Tel Aviv stock exchange was shut for the Yom Kippur holiday. High anxiety at the Frankfurt stock exchange. Photograph: Kai Pfaffenbach/Reuters ... more -
As markets tumble, Bush seeks to ease fears
WASHINGTON - As the stock market plunged to its lowest level in five years, the White House on Thursday sought to assure anxious Americans that the United States is working aggressively to stabilize the nation's chaotic financial system.
In a new effort to calm the crisis, President Bush will make a statement on the economy Friday in the Rose Garden. Bush is not expected to announce any new policy decisions, White House press secretary Dana Perino said.
"He will assure the American people that they should be confident that economic officials are aggressively taking every action to stabilize our financial system," Perino said. "The Treasury Department, the Federal Reserve and the FDIC all have the necessary tools to address the problems we are facing.
"The Treasury Department is moving quickly to use new tools to improve liquidity, which is the root cause of this problem," she said. "Americans should be confident that every effort is being taken to stabilize our markets."
Meetings with G-7 leaders
Bush will meet at the White House on Saturday with finance ministers from Britain, France, Germany, Italy, Canada, Japan and the United States and then make another statement in the Rose Garden, Perino said.
Bush's statement reflects a nonstop effort by the president to show he is on top of a crisis that could help define his presidency. WASHINGTON - As the stock market plunged to its lowest level in five years, the White House on Thursday sought to assure anxious Ameri... more -
World Markets Continue to Plummet
A massive sell-off on Wall Street and escalating fears of a global recession sent world stocks plunging Friday, with Japan's key index shedding nearly 10 percent to close out its worst week in history. A massive sell-off on Wall Street and escalating fears of a global recession sent world stocks plunging Friday, with Japan's key ... more
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US financial turmoil ripples felt in Africa
African stock markets are feeling the heat of the world financial crises created in the United States. At the Nairobi Stock Exchange of Kenya (NSE), the share price fell to a new historical low of Sh4.30 on Tuesday.
Strong indications have emerged that the Council of the Nigerian Stock Exchange (NSE) may have made headway in its efforts to bail out the nation's stock from its lingering slide. By the end of last week, foreign investors had reduced their South African equity holdings by R24bn this year, compared to net purchases of almost R60bn over the same period last year.
All these and recent trends show that finally, the global financial crises has begun hitting African continent. On Monday, Prime Minister Raila Odinga joined world leaders in warning that the financial crisis on Wall Street would inflict significant damage on African economies, including Kenya's.
Speaking on the sidelines of an international development conference in France, Odinga told Reuters that the turmoil in world markets “will impact very negatively on the Kenyan economy in the short and medium term.”
"They say that when America sneezes, Europe catches a cold, Asia develops pneumonia and Africa's tuberculosis gets worse. This is what we are beginning to see,” Odinga added.
World Bank and United Nations officials also spoke about Africa's prospects for continued economic growth. Panic on Wall Street and in other financial centres could cause Western investors to reduce their stakes in African businesses, Shanta Devarajan, the World Bank's top economist for Africa, said in Washington on Monday.
“Now there is a risk that if there is a really difficult financial crisis in the United States and Europe and risk aversion rises, it is possible these capital flows which have fuelled growth in Africa will fall,” Devarajan said.
In the case of Kenya, the NSE 20 share index, a key performance indicator, has over the past 12 months dropped by about 1,000 points, washing away about a quarter in returns. That means an investor who bought shares on all the 20 counters included on the NSE 20 index in October 2007 has by now lost a quarter of his investment. African stock markets are feeling the heat of the world financial crises created in the United States. At the Nairobi Stock Exchange o... more -
The Other Bubble: Emerging markets
The headlines have been dominated by shady subprime loans, Fannie Mae, and the credit crunch, but another major development has been a second bubble bursting overseas: emerging markets. Although they were the hot investment earlier in the decade, the BRIC countries seem to be cooling down significantly.
If you think things are bad here, look at Russia: down over 50 percent since June.
Full article:
http://www.tarheelbusiness.net/?p=206 The headlines have been dominated by shady subprime loans, Fannie Mae, and the credit crunch, but another major development has been a... more -
Central banks slash interest rates
The Bank of Canada, in a co-ordinated effort with other major central banks, has cut its short-term interest rates by half a point in response to the global economic crisis. The Bank of Canada, in a co-ordinated effort with other major central banks, has cut its short-term interest rates by half a point in ... more
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Nikkei dives 9.4 percent, biggest 1-day fall since '87
TOKYO (Reuters) - The Nikkei average plunged 9.4 percent on Wednesday, its biggest drop since the 1987 stock market crash, as growing fears of a global recession led investors to wipe $250 billion off the value of Tokyo shares.
Toyota Motor Corp (7203.T) tumbled more than 11 percent on growing expectations that the crisis would bite deeper into its profits, while the yen hit a six-month high against the dollar, adding to the pressure on exporter shares.
Panic over the fast-spreading financial crisis dragged down markets across Asia, with Japanese steelmakers such as Nippon Steel Corp (5401.T) sliding, as the Nikkei set another five-year closing low. It has lost 19 percent in the past five days.
"The deteriorating outlook for the economy and the deepening financial crisis are pushing fear to its limit," said Mitsushige Akino, chief fund manager at Ichiyoshi Investment Management.
"Investors want to dump shares as their willingness to take risks has shrunk, but no one wants to buy even if stocks are valued cheaply."
The yen climbed to a six-month high against the tumbling U.S. dollar, as investors stampeded away from stocks and risky positions.
The Nikkei posted its biggest one-day fall since a 14.9 percent drop on October 20, 1987, the day after Black Monday, and logged the third-largest one-day drop ever.
The Indonesia Stock Exchange halted trading on Wednesday after the benchmark composite index (.JKSE) dropped more than 10 percent, while Hong Kong's main stock market index (.HSI) dropped more than 5 percent.
The benchmark Nikkei (.N225) slid 952.58 points to 9,203.32, its lowest close since June 2003. TOKYO (Reuters) - The Nikkei average plunged 9.4 percent on Wednesday, its biggest drop since the 1987 stock market crash, as growing ... more -
Bank shares plummet and Icesave deposits frozen
The global financial crisis wiped billions of pounds from the value of British banks today as 300,000 British savers were blocked from accessing their money in the Icelandic bank Icesave after it collapsed.
Alistair Darling, the Chancellor of the Exchequer, is expected to make a statement today after flying back to London early from a meeting of EU finance ministers. The 27 member states today agreed to more than double the minimum level of bank deposit protection in Europe to €50,000.
The dramatic falls in bank shares came as a report leaked out from top secret talks between the banks and the Treasury in Downing Street last night.
It alleged that Royal Bank of Scotland, Lloyds TSB and Barclays had asked the Chancellor to bring forward plans for the taxpayer to help them to recapitalise by buying a £50 billion stake in banking shares.
Robert Peston, the BBC's business editor, wrote in his blog at 7am today that the three had indicated that each would like £7.5 billion now, with a further £7.5 billion guaranteed by the Treasury if necessary.
Barclays swiftly put out a statement denying the report, saying: "Barclays has not requested capital from the Government, and has no reason to do so."
RBS later followed suit, but not before Sir Fred Goodwin, the chairman of RBS, had appeared to add weight to the rumour when he said at a press conference today that he thought there would be a Government decision on the recapitalisation plan "sooner rather than later".
on the www.icesave.co.uk website: "We are not currently processing any deposits or any withdrawal requests through our Icesave internet accounts. We apologise for any inconvenience this may cause our customers. We hope to provide you with more information shortly." The global financial crisis wiped billions of pounds from the value of British banks today as 300,000 British savers were blocked from... more -
Stock market alarm
Talk about a wake up call! When the Toronto Stock Exchange opened for
trading Monday the S&P/TSX composite index promptly fell more than 1,000
points or 10 per cent, wiping out $100 billion in value. The rout was led by
energy and financial stocks but there were few gainers in any sector.
It wasn't the worst plunge in history, that record is still held by Black
Monday Oct. 19, 1987 when the index fell 11.3 per cent. But it was still an
eye opener.
In early trading, the index fell below the psychologically significant
10,000 level but recovered in the afternoon with the latest numbers showing
a decline of about 800 points, leaving Toronto's main index slightly above
that level. The Dow Jones industrial average, meanwhile, was off by more
than 500 points, marking the first time the bellweather index been below
10,000 in four years. Talk about a wake up call! When the Toronto Stock Exchange opened for ... more -
Canada headed for recession
Declining GDP in the fourth quarter of this year and the first quarter of 2009 will bring the Canadian economy into an official recession, UBS predicted Monday. Declining GDP in the fourth quarter of this year and the first quarter of 2009 will bring the Canadian economy into an official recess... more
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UK Markets tumble as banking fears spread across Europe
Britain's blue chip companies lost £60 billion in value in just a few minutes today as investor confidence crumbled and political leaders battled to avert the threat of recession.
The FTSE 100 index of leading shares fell by some 250 points in the first six minutes of trade, following sharp losses across Asia, and drifted down to reach a four-year low of 4,670.9 by late morning, 6 per cent down on Friday's close.
For policymakers and central bankers, it was a nightmare start to the week – little helped by the failure of EU leaders to agree on a European banking rescue scheme or even, it appeared, on a common strategy.
There was continued confusion as to the detail of Germany's decision to guarantee all private bank deposits as Austria and Denmark broke ranks to follow suit and Spain threatening to do so if the EU did not take action.
Both Gordon Brown and Alistair Darling, the Chancellor, who is keen to avoid a similar blanket guarantee, were working the phones. Mr Brown discussed the crisis with President Sarkozy of France this morning and was due to talk with Angela Merkel, the German Chancellor, later today to clarify Germany's plans.
"In the last 24 hours, the Prime Minister and the Chancellor have been spending a lot of time on the phone. We continue to urge cooperation at an EU and international level," his spokesman said.
No stock was in positive territory on the UK benchmark index but banks were again among the biggest fallers, with Barclays, Royal Bank of Scotland and HBOS down between 11.8 and 15.5 per cent. HBOS was marked down partly on fears that the Treasury could move towards a taxpayer-funded recapitalisation of British banks – effectively a partial nationalisation – which could reopen its takeover by Lloyds TSB. Britain's blue chip companies lost £60 billion in value in just a few minutes today as investor confidence crumbled and political... more -
World Markets Down
Asian and European stock markets plunged Monday as government bank bailouts in the U.S. and Europe failed to alleviate fears that the global financial crisis would depress world economic growth. Asian and European stock markets plunged Monday as government bank bailouts in the U.S. and Europe failed to alleviate fears that the ... more
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Wells Fargo to buy Wachovia for $15B
Wells Fargo said it expects to take a $10-billion U.S. charge on the transaction, but said in a release it believed the deal would raise earnings "in the first year of operations." Wells Fargo said it expects to take a $10-billion U.S. charge on the transaction, but said in a release it believed the deal would rai... more
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Problems for the Political Economy
On Monday, the House of Representatives voted down Treasury Secretary Paulson’s plan to save the global financial system. Financial markets didn’t take long to react: the Dow Jones Industrial Average had the worst day in its history.
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I spoke to a congressional aid yesterday afternoon about his representative’s vote. He informed me that while the Republican congressman was skeptical but not necessarily against Paulson’s plan, the partisan footnotes attached to it forced him to oppose the legislation. These provisions deviated from the goal of providing credit market relief and entered the realm of government handouts.
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It is absolutely unacceptable for the future of the American economy to be put in jeopardy over a few cheap political points. A streamlined bill that puts the country first is needed, so that it can draw strong, bipartisan support. Congress needs to act for America’s well being, not their own.
Full article: http://www.tarheelbusiness.net/?p=193 On Monday, the House of Representatives voted down Treasury Secretary Paulson’s plan to save the global financial system. Financial ma... more -
Market strategy after Black September
Tar Heel Business writes on how individuals can keep their money safe when all hell has broken loose in the financial markets.
Full article:
http://www.tarheelbusiness.net/?p=186 Tar Heel Business writes on how individuals can keep their money safe when all hell has broken loose in the financial markets. ... more -
World Trade Center rebuilding delayed
Seven years after the Sept. 11 attacks, the financial windstorm shaking Wall Street may have slowed New York's drive to rebuild the World Trade Center and revitalize Manhattan's downtown neighborhoods. Seven years after the Sept. 11 attacks, the financial windstorm shaking Wall Street may have slowed New York's drive to rebuild t... more
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The $700 Billion - First reactions
I felt that I should write something about the gargantuan governement bailout plan, but it’s hard to do so since it’s still in negotiation. Initially, I had a lot of reservations against this. Looking into it some more, it might not be as bad as I thought.
Full article: http://www.tarheelbusiness.net/?p=178 I felt that I should write something about the gargantuan governement bailout plan, but it’s hard to do so since it’s still in negotia... more -
No, investment banking isn’t going away
When Morgan Stanley and Goldman Sachs announced that they were filling to become “bank holding companies”, meaning diversify into commercial banking, one of my friends asked me if this meant that investment banking as we know it was over. Absolutely not. Hard times, yes. Extinction? Not even close.
As long as there are businesses (meaning, barring Great Depression II or World War III), there will be a need for corporate-sized capital. As long as there are businesses, there will be mergers & acquisitions, initial public offerings, and as long as there are capital markets, there will be secondary markets.
Investment banking isn’t going away. The traditional model of the American investment bank might be–but that’s okay. In the United States, we have four disctinct types of depository institutions:
1. Commercial banks
2. Investment banks
3. Credit unions
4. Savings & loan institutions
In Germany, they have:
1. Banks
…and that’s it. The only reason why we have four (albeit you don’t really hear much about savings & loan institutions since the 1980s) is because of New Deal-era legislation, such as the Glass-Steagall act, that forced the financial system to be this way.
Full article: http://www.tarheelbusiness.net/?p=173 When Morgan Stanley and Goldman Sachs announced that they were filling to become “bank holding companies”, meaning diversify into comm... more -
Solution to a crisis
Tar Heel Business writer Chris Hartle analyzes the mess on Wall St. and the government's attempt to mop things up.
During the past few months, serveral large firms have failed due to complications involving mortgage back securities. On May 14th 2008, Bear Stearns collapsed causing the Federal Reserve board to organize a takeover by JP Morgan Chase. This initial event signaled the changes occurring in general economic trends and reminded investors that another “Great Crash” was still in the realm of rational thought. Since then, a slue of troubled companies have surfaced, displaying the true depth of the current credit crisis.
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Paulson and Bernanke also decided to help AIG by providing 85 billion dollars in exchange for majority ownership. AIG is a giant insurance seller that maintains billions of dollars in policies protecting mortgage back securities and other assets. A bailout decision was made since AIG is so deeply involved in the current crisis. Its failure could have had catastrophic effects on many insurance policy holders and the national real estate market.
Full article: http://www.tarheelbusiness.net/?p=164 Tar Heel Business writer Chris Hartle analyzes the mess on Wall St. and the government's attempt to mop things up. ... more -
Financial disaster adverted? First impressions
The start of the week was the worst that we have seen in a long time. Drudge Report gave Merrill Lynch’s demise a name: Black Sunday. But, the week ended with the NYSE down only 34 points. What happened?
First, the 400-some point drop on Monday was actually good news.
Wait a minute. One of the worst drops in the stock market since September 14 (the day markets re-opened after September 11), the dot-com bubble bursting, and the 1987 crisis was good news? Am I out of my mind? Probably, but that has nothing to do with this.
When two bulge bracket firms fold, mortgage giants Fannie Mae and Freddie Mac get effectively nationalized the week before, AIG folds, and gold prices spike-a 400 point drop is best-case scenario. My initial fear was a drop so big that the curbs would kick in.
But, they didn’t.
Read more: http://www.tarheelbusiness.net/?p=155 The start of the week was the worst that we have seen in a long time. Drudge Report gave Merrill Lynch’s demise a name: Black Sunday. ... more
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