Market Plunge !

[Cheekg98]

[Cheekg98]

Markets slide as US property fears spread

Singapore stocks shed 116 points in face of troubling news from US credit markets

 

By CONRAD TAN

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(SINGAPORE) Stock markets around the world plunged yesterday following sharp losses in US equities on Tuesday, as the problems which began in the subprime mortgage market there continued to infect other parts of the financial markets.

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The Straits Times Index fell 115.95 points or 3.3 per cent to end at 3,431.71, the lowest since May2.

 

In Australia, shares declined by more than 3 per cent, as reports said that two funds managed by Macquarie Bank, Australia's largest securities firm, were facing losses of up to A$300 million due to US subprime mortgage exposure.

Meanwhile, US investment bank Bear Stearns stopped investors from withdrawing money from another of its funds. Two of its other funds nearly collapsed in June after suffering massive losses linked to subprime mortgages.

Fears that the problems have now spread to the wider markets fuelled the bout of selling yesterday.

'No one knows where the ultimate subprime risk resides so investors across the globe are ducking for cover.' - Simon Carter, head of North American equities at Aegon Asset Management

'There's currently a flight to safety caused by more troubling news in the US credit markets,' said economist David Cohen at Action Economics.

Rising defaults and delays on payments by homeowners in the United States have led to losses by hedge funds and banks investing in securities backed by these payments.

This has in turn driven up borrowing costs for companies and buyout funds, as creditors tighten conditions for lending and investors shy away from new debt issues.

Low-cost debt has played a large part in financing private equity buyouts of public-listed firms in recent months. Speculation surrounding the deals and other potential targets has in turn driven up share prices in major markets.

Fears about how wide the subprime contagion has spread is now unsettling investors worldwide.

'No one knows where the ultimate subprime risk resides so investors across the globe are ducking for cover,' Simon Carter, head of North American equities at Aegon Asset Management in Edinburgh, told Bloomberg. Some of them hit the panic button yesterday.

In Japan, the Nikkei-225 index fell 2.2 per cent, while Hong Kong's Hang Seng Index fell 3.2 per cent. China's indices in Shanghai and Shenzhen both lost 3.8 per cent, while South Korea's Kospi index dived 4 per cent.

In South-east Asia, the Kuala Lumpur Composite Index ended 2.5 per cent lower, while key indices in Thailand, Indonesia and the Philippines also lost more than 2 per cent.

In Europe too, shares got off to a weak start, with London's FTSE-100 index trading 1.5 per cent lower at noon in the UK.

Mr Cohen said Asian investors would now be looking to see if the turmoil in the financial markets would dampen consumer confidence in the US, which would in turn affect demand for Asian exports. 'That's clearly the biggest concern right now.'

But economic fundamentals around the region and the world have been 'very solid', he added.

Kevin Scully, managing director of NetResearch Asia, said he expects to see more selling in the stock market here in the next few days, forced by margin calls. 'I think it's a good correction back to fundamentals.'

Jimmy Koh, United Overseas Bank's head of economics and treasury research, said financial markets were adjusting for a global repricing of credit risk.

'This is an issue of confidence. Once the dust settles, it's important to note that the fundamentals have not been eroded.'

The current sell-off would create a 'cleaner, more robust' financial system, he said

Edited August 1, 2007 by Cheekg98

[Cheekg98]

European, Asian Markets Slip Again

By MATT MOORE

AP Business Writer

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FRANKFURT, Germany (AP) -- European and Asian markets tumbled again Wednesday, spurred by mounting fears that the crisis in the U.S. subprime market could engulf banks and other companies around the world.

In Germany, the DAX-30 Index fell nearly 1 percent to 7,517.99 as banking stocks slid on news that American Home Mortgage Investment Corp. had missed margin calls from its lenders and was considering liquidation.

The company said turbulent conditions in the mortgage market forced it to mark down the value of its portfolio of home loans and loan-backed bonds.

That caused shares to drop as persistent concerns that woes in the U.S. housing loan market could prove a drag on global growth. The U.K. FTSE 100 index fell 1.2 percent to 6,283.70 and the French CAC-40 index lost 1.6 percent to 5,659.26.

In Asia, Japanese stocks sank 2.2 percent to a four-and-half-month low, Hong Kong's market fell 3.2 percent, and South Korean shares plunged 4 percent. Indian stocks also sank 4 percent.

Chinese stocks, which had shrugged off the global market turmoil until now, retreated from record highs. The benchmark Shanghai Composite Index fell 3.8 percent.

Jimmy Yates, a dealer at CMC Markets in London, said the drop in European markets was linked to the subprime mortgage crisis in the United States, particularly in the wake of Tuesday's announcement by American Home Mortgage.

"A lot of this stuff has been talked about and now people are starting to really factor it in and thinking it could have an effect on GDP and a U.S. slowdown," Yates told The Associated Press. "The knockdown effect on the global economy can never be discounted."

He said traders are curious and cautious about what kind of amounts of money could be involved, adding that some estimates have run as high as $250 billion.

"No one knows what kind of effect it's going to have," he said. "We could be talking massive amounts of money."

Deutsche Bank AG fell more than 2 percent even after its second-quarter profit surged 31 percent on an investment banking business that proved to be solid amid global market jitters. The bank said its exposure to the subprime mortgage market, or real estate loans made to borrowers with weak credit histories, was not significant.

Similarly, French bank BNP Paribas fell nearly 1.2 percent after posting a 20 percent jump in second-quarter net profit and saying that it is hardly affected by the current subprime mortgage crisis or by tensions in the leveraged buyout market.

Rebecca Engmann Darst of Interactive Brokers said that credit fears trailing the losses in global indices was an ominous sign for U.S. shares.

"Spreading turmoil in the global financial sector on fears of subprime contagion and a generalized credit crunch led Asian stocks sharply lower," she said, adding that Europe's indexes were showing remarkable slides as well.

U.S. stocks zigzagged in early trading Wednesday as Wall Street tried to grapple with continued worries about U.S. home loans and the credit market. The Dow Jones Industrial Average was up 38.77 points to 13268.07 in midmorning trading, after it had fallen earlier in the day fell 0.2 percent to 13,180.04. Broader stock indicators fell.

In Tokyo the Nikkei 225 fell 2.2 percent, to 16,870.98 points, the lowest since March 16. The Korea Composite Stock Price Index, or Kospi, dropped 4 percent to 1,856.45, the lowest close in a month.

In Australia, worries about contagion rose after Fortress Investments Ltd., the high-yield fund manager of Macquarie Bank Ltd., said late Tuesday that investors in its two funds face losses of up to 25 percent, affected by price volatility in the U.S. credit market.

Though its funds aren't directly exposed to U.S. subprime mortgages and Macquarie Bank doesn't have any direct exposure, either, the bank's shares tumbled 10.7 percent, helping drag down Sydney's benchmark S&P/ASX 200 index 3.3 percent

[Cheekg98]

11th hour rally on Wall Street Major gauges break into the black minutes before the closing bell after a tumultuous session. By Jessica Dickler, CNNMoney.com staff writer August 1 2007: 4:11 PM EDT

 

NEW YORK (CNNMoney.com) -- Stocks rallied late in the session Wednesday as investors weighed credit concerns and oil prices in addition to some better-than-expected economic news and corporate earnings reports.

The Dow Jones industrial average (up 101.77 to 13,313.76, Charts) rose over 150 points, or 1.2 percent after struggling for most of the session.

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The broader Standard & Poor's 500 index (up 11.70 to 1,466.97, Charts) added 0.7 percent and the tech-heavy Nasdaq composite index (up 5.37 to 2,551.64, Charts) gained 0.3 percent.

All three major gauges got off to a rocky start on the heels of a stock selloff in the previous session.

But stocks bounced into the black briefly after the Institute for Supply Management reported that nationwide manufacturing activity fell more than expected and the National Association of Realtors' pending home sales index jumped more than expected in June.

Oil prices weighed in following the government's weekly report on crude inventories, which showed a huge drawdown last week. U.S. light crude for September delivery sank $1.26 to $76.95 a barrel after reaching a peak of $78.77, according to Reuters.

In addition, credit concerns, a slumping real estate market and corporate earnings compounded investors nervousness throughout the session, according to Art Hogan, chief market strategist at Jefferies & Co.

"We don't know the magnitude of all of those issues," Hogan said, and "that is giving markets the jitters."

Edited August 1, 2007 by Cheekg98

[Mubarakrashid]

the beginning of the end?

[Stary]

not sure why people are making a mountain out of a molehill. I don't think this was a plundge, more like a healthy correction to me.

 

Sub prime woes? More like a technical correction to me when I look at the charts.

[Rickster]

I sort of agree as stock markets have been continuously hitting record highs based mainly on market sentiments.

[Nkps]

i better gear up for business liao

[RadX]

u go standy by MRT stations in EAST, I do WEST,

 

Rashitd at Shitty Hall

[Nkps]

Sh!tty Hall underground where got business one??? u got take MRT or not???

[RadX]

[Mubarakrashid]

u go standy by MRT stations in EAST, I do WEST,

 

Ra****d at ****ty Hall

 

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eh..go there distribute flyers izzit?

[Mubarakrashid]

Sh!tty Hall underground where got business one??? u got take MRT or not???

 

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i push people down the escalator..

[Nkps]

yeah pls tell them where are all the above ground station...

[Nkps]

boss.... business is hard to do but no need to land yourself into trouble mah...

[Mubarakrashid]

basket.. i'm biz devt director.. ask me to do marketing..

[Nkps]

better than do manual work pushing pple down escalator mah

[Mubarakrashid]

boss.... business is hard to do but no need to land yourself into trouble mah...

 

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wat to do.. world market is booming but yet more and more people living long age.. we must spped up the process..