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Tokyo, Singapore stocks dive
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December 14, 1998: 5:33 a.m. ET
Nikkei, Straits Times lose more than 2 percent as Hong Kong also sees red
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LONDON (CNNfn) - Tokyo stocks tumbled more than 2 percent Monday, dragged down by a key business confidence survey that showed the worst may not be over for Japan's ailing economy. Singapore stocks suffered even more and Hong Kong also headed south on a bad day for the region.
Lower closes in New York and Europe Friday set a negative tone for Asian trade.
Thai stocks closed a hefty 4.3 percent lower while Australian stocks ended down 2 percent at 2,676.5. The Philippines also lost 2 percent with Taiwan shedding 0.7 percent.
Indonesian stocks eased 0.2 percent.
Korea closed 0.7 percent higher while Malaysia posted the best gains of the day to climb 1.3 percent.
Japanese stocks wiped out a month of gains in little more than two days to close 294.02 points lower at 14,111.62.
The government said over the weekend it would put troubled Nippon Credit Bank under state control in a move that pleased as many market-watchers as it troubled.
While some felt it showed the government was getting to grips with the battered banking sector, others feared for the underlying health of the economy.
A key business confidence survey by the Bank of Japan also highlighted the extent of the problems facing the economy, undermining government statements that the country's problems were bottoming out.
The "tankan" survey showed pessimistic manufacturers greatly outnumbered optimistic producers. Among non-manufacturers, the index was almost as damning.
West LB Securities treasury economist Richard Hostetter said corporations were still forecasting things would get better soon, despite the bad numbers.
"When do firms finally start to price in and reflect in their behavior where the economy really lies?" he asked. "In two and a half days we have wiped out 900 points on the equity market."
Banks and real estate joined manufacturing stocks in the red. Sanwa Bank plunged almost 6 percent to 1,022 yen while Honda Motor closed off 4.5 percent at 4,000 yen.
Sansui Electric dived 7.5 percent to 37 yen with Tokyu Land Corp. plunging 6.2 per dent to 137 yen.
Of the big three markets, Singapore stocks posted the biggest falls of the day. The Straits Times index closed down 2.3 percent or 31.77 points at 1,379.5.
"The general sentiment looks a bit weaker," said one Singapore trader. "Tokyo was down three days in a row so I think we're looking a bit expensive."
Banks and other finance stocks led the market lower. OCBC and Development Bank of Singapore both shed 20 cents to S$7.55 and S$6.5 respectively.
Index heavyweight Singapore Press Holdings added to the slide, losing 40 cents to S$17.4.
Hong Kong stocks endured a second day of heavy losses, though they rallied a little in afternoon trade. The Hang Seng index finished down 126.79 points or 1.27 percent at 9,825.21. China-related stocks also dipped.
"The main reason the market closed down is the severe lack of liquidity in the market right now," said one trader. "It was only a HK$3 billion day here in Hong Kong. Funds in the U.S. and the U.K. are extremely quiet."
Developers again led the market down, though the HK$1.5 fall in HSBC Holdings to HK$187.5 did not help.
New World Development was 35 cents off at HK$18.3 while Cheung Kong was down 75 cents at HK$53.
Shanghai Industrial was one of only two blue chip stocks to close higher. It closed up 35 cents at HK$16.5 after confirming it would not buy a hotel portfolio from its parent.
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