Asian Stocks Hit Two-Month Low
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Photo Credit: thienzieyung
Asian stocks drove the benchmark index down, amid a worsening credit-market as losses pile on top of the other. Speculation has it that the high borrowing costs might lead to steep declines in earnings.
When Lehman Brothers Holdings Inc posted a loss of about $2.8 billion other firms followed suit, and Macquarie Group Ltd. as well as Babcock & Brown Ltd. also incurred heavy losses as they plunged hard in Sydney trading.
The Industrial & Commercial Bank of China Ltd. declined after a government mandate telling the banks to increase reserves. This would be the fifth time Chinese banks will be increasing reserve in 2008. Orient Overseas International Ltd. came down ahead of other shipping companies on speculation that surging oil costs will pare down profit.
The MSCI Asia Pacific Index fell by 2.1 percent to 144.26. There were about six stocks that incurred losses for each one that gained. The outlook is bleak as financial and industrial stocks declined, pulling down the rest of the 10 industry groups with it.
It will take a very long time - up to several years - before the present credit problems can be sorted out within the system. What we see now is a market that’s highly reactive to rising interest rates. It is this fear that’s making the market highly volatile nowadays.
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