Hang Seng index, Nikkei 225 tumble in Asia Crisis

As London markets closed on Wednesday the Dow Jones and Asian markets were set to take a battering. The FTSE-100 closed down 4.3 percent yesterday and the pound suffered its most dramatic loss since Black Wednesday after the Prime Minister Gordon Brown said the economy will slid into recession following the comments of Mervyn King.

Wall Street opened to heavy selling, this continued in Asia with Tokyo’s Nikkei 225 share average dropping 7 percent although in later trade managed to claw back a little.

Hong Kong’s Hang Seng index fell below 14,000 for the first time since July 2005 when it lost 4.6 percent at one stage of trade. South Korea’s Kospi index tumbled 8.5 percent at its lowest point of trade.

As Central Banks and the Bank of England look to soften the punch of the economic downturn investors are pricing in more aggressive interest cuts. Policymakers in particular are worried about the sharp decline in China, which in recent years has driven the global markets.

Market Observers are forecasting that growth will fall below 8 percent next year, although this is still relatively high, fears grow that this will cause unemployment. Measures have been taken by Beijing to reduce, capital gains on houses, business taxes and VAT in a bid to give a little slack to peoples purse strings, although this has resulted in little confidents from Chinese investors.

Source: Telegraph