TOKYO, Aug 15, 2007 (AFP) – Most Asian stock markets suffered another mauling in early trade on Wednesday after an overnight slump on Wall Street dashed hopes of an end to recent turmoil sparked by US mortgage woes. The latest wave of selling came despite recent efforts by the world’s major central banks to restore calm to global markets by pumping billions of dollars of emergency funds into the banking system.
Dealers said that although Asia’s exposure to the US mortgage problems appeared to be limited, the fear is that foreign funds will be forced to sell Asian stocks to cover losses on subprime loans to risky borrowers.
The Tokyo market buckled after two days of relative calm that had raised hopes that markets might have finally hit a bottom after recent plunges.
US and European stock markets sustained heavy losses Tuesday as concerns lingered about a potential credit crunch, setting Asian bourses up for another nail-biting day as jittery investors fretted more bad news might come out.
“Things are still very shaky in the States and that’s really driving a lot of the concerns at the moment,” said Lorraine Tan, vice president of Asia equity research at Standard & Poor’s in Singapore.