Asian markets tumble as war fears mount


WAR jitters continued to weigh on stock markets in Asia yesterday. The Seoul and Jakarta bourses were the worst hit, with their indices sliding nearly 3%. 

The selling pressure was compounded by last Friday's sharp fall on Wall Street, caused by renewed corporate earnings concerns that had wiped out the market gains made since the start of the year. 

In contrast, prices of fixed-income US Treasuries and gold climbed further as investment funds fled from equities. The gold price touched a fresh six-year high of US$372 per ounce in early London trading yesterday.  

Oil prices also remained high. Brent crude was quoted at US$32.04 per barrel and Tapis was traded at US$31.90 in early London trading. 

Seoul's Kospi Index shed 16 points or 2.7% to 593 yesterday, the Jakarta Composite Index slipped 12 points or 2.9% to 393.5, while Singapore's Straits Times Index lost 27 points or 2% to 1,331. 

The local stock market fared slightly better than the neighbouring bourses, with the KLSE benchmark Composite Index (CI) closing only 4.2 points or 0.6% lower at 664.6 after being down by almost 17 points in the morning. .  

Late bargain hunting on selected heavyweights such as Malayan Banking Bhd, Tenaga Nasional Bhd and Telekom Malaysia Bhd helped the stocks to recoup earlier losses.  

Petronas Gas Bhd and Malaysia International Shipping Corp Bhd bucked the overall market's downtrend, gaining 35 sen and 30 sen to close at RM7.30 and RM7.50 respectively.  

Dealers said stale bulls unloaded their shares yesterday ahead of the release of the United Nation's weapons inspection report on Iraq, amid the growing belief that the US was likely to launch military action against Iraq regardless of what the report said.  

US Secretary of State Colin Powell had pointed out over the weekend that America was willing to attack Iraq alone if the UN Security Council shrank from “disarming President Saddam Hussein.” 

Investors also unwound their positions in certain Asian markets that would close for the Lunar New Year celebrations so that they would have peace of mind and enjoy the holidays. 

“Not many want to take the risk of holding long positions during the Lunar New Year break ? anything can happen during the break,'' said KL City Securities head of research Andy Ong.  

Given the geopolitical tensions, Ong has been advising his clients to adopt a “defensive and cautious” stance. He said fears of war were the dominant factor that had dampened local sentiment because the fundamentals of the KLSE were still intact. 

“Investors may nibble at certain stocks but it is not the right time for aggressive buying, particularly the high-beta counters,'' he said. 

Analysts concurred that it was almost a “foregone conclusion” that there would be a war in Iraq. The concern now was the duration of the hostilities 

Investors with high-risk appetite might see the current market volatility as an opportunity to accumulate stocks and get ready for a “relief rally” when geopolitical worries dissipated, said the head of research at a local stockbroking house. 

Nonetheless, he said investors who entered the market now would have to live with market turbulence, especially if the war dragged on.  

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