05/17/2010, 00.00
ASIA

Asian markets fall sharply, Shanghai loses 5 per cent, reaching lowest point of the year

All indexes are down: Tokyo (–2.17 per cent), Hong Kong (–2.14 per cent), Kuala Lumpur (–2.06 per cent), Seoul (–2.6 per cent), Singapore (–0.75 per cent) and Bangkok (–2.5 per cent). In Thailand, the country’s political crisis is an additional burden. Fear over Europe undermines confidence in the EU rescue package, seen as inadequate to avoid contagion, putting other countries are risk like Greece.
Shanghai (AsiaNews/Agencies) – Shanghai stocks took a plunge today, dragging the rest of Asia. The Shanghai Composite Index lost 5.07 per cent. On Japan, the Nikkei index lost 2.17 per cent. Similarly, Hong Kong tumbled with its benchmark Hang Seng Index losing 2.14 per cent. Bursa Malaysia ended the morning session down (- 2.06 per cent). Thai shares fell 2.5 per cent amid an escalating domestic political crisis. South Korea’s Kospi dropped 2.6 per cent, whilst Singapore kept losses at a minimum (-0.75 per cent).

Banks and real estate companies led the decline in China as new, more restrictive government measures came into effect. However, investors across Asia took the cue from the downtrend on Wall Street on Friday, and signs of crisis in the Euro zone.

“The European debt problem will impact the (pace of) economic recovery. It's not just Greece; all European countries will have to work hard to reduce deficits,” Andrew Teng, Assistant Vice President at Taiwan International Securities, said,

What is more, “It's not just the problem of Greece's debt burdening the euro, but also the lingering fears of wider contagion," said Hideaki Inoue, chief manager of foreign exchange and financial products trading at Mitsubishi Trust and Banking Corporation.

Markets have thus confirmed doubts among Asia investors that the European Union’s € 720 billion fund will not be enough to stop the crisis from spreading.

After dealing a knockout blow to the Greek economy, the crisis could in effect affect other economies in the near future.

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