“If the largest insurance company [in the world] can fail, [America International Group Inc] than no one is safe.”
Photo credit – thedigeratilife.com
Asian stocks tumbled Thursday, tracking declines on Wall Street as investors feared more companies could succumb to the global financial crisis that forced the US to bail out troubled insurer American International Group Inc.
Every regional benchmark fell deeply in the red. Hong Kong’s Hang Seng Index led the region’s losses, tanking 1,272.86 points, or 7.22 percent, to 16,364.33 – its lowest level in over two years.
In Japan, the Nikkei 225 stock index was down 445.67 points, or 3.79 percent, at 11,304.12. Australia’s S&P/ASX200 index fell more than 3.5 percent, South Korea’s Kospi lost 3.6 percent and Shanghai’s index fell 5.8 percent. As equities markets staggered, investors fled to gold, seen as a safe haven in times of trouble.
Investors were unsettled by the Federal Reserve’s $85 billion loan to AIG, the huge US insurer that lost billions in the risky business of insuring against bond defaults. It was the latest financial giant to fall in a historic financial crisis on Wall Street that’s already claimed investment banks Lehman Brothers and Merrill Lynch.
“It’s a complete collapse of confidence,” said Francis Lun, general manager of Fulbright Securities Ltd in Hong Kong. “The financial crisis in the US is hitting everyone, everyone is running for cover. If the largest insurance company can fail, than no one is safe.
Financial stocks across Asian went into a tailspin.
Japan’s three megabanks fell hard: Mizuho Financial Group, Inc. sank 7.2 percent, Mitsubishi UFJ Financial Group, Inc. shed 4.6 percent, and Sumitomo Mitsui Financial Group retreated 7.4 percent.
Leading China lender Industrial & Commercial Bank of China Ltd, or ICBC, fell over 5 percent in Hong Kong.
Macquarie Group Ltd., Australia’s biggest investment bank and securities firm, took an 18 percent nosedive.
Richard herring, the director of trading at Burrell Stockbroking, said Australian investors were nervous about AIG bailout.
“It has actually opened up a whole lot of other questions for investors to answer and that is: AIG is on the rack, what else is potentially out there that could go under?” Herring said.
Source – Jerusalem Post