MAJOR stock markets in Asia ended the first quarter of the year substantially lower as concerns over the economic impact from the war in Iraq weighed on investor sentiment.
In addition to the fall-out from the war, investors in some Asian markets are also facing other uncertainties, ranging from a perceived instability in the Korean peninsula to the spread of the deadly Severe Acute Respiratory Syndrome (SARS).
American and European markets, which saw a huge rebound in the days immediately before and after the eruption of the war in Iraq, resumed their downward trend over the past week as investor sentiment was dampened by prospects of a longer-than-expected conflict.
“Whatever it is, the headline news is negative,'' said TA Securities head of research C.K. Ngu.
In Asia, the worst performing market was Seoul, where the Kospi Index lost 15.7% in the first quarter. Compounding investors' worries over the market outlook were a major accounting scandal and escalating tension in the peninsula resulting from the belligerent comments and actions of North Korea.
Japan's Nikkei 225, already beaten down by worries about the state of the economy and the country's banks, closed down 307 points or 3.7% at 7,972 on the last day of the Japanese business year, a day many had presumed would see some window-dressing activity. For the fiscal year, the Nikkei was down 28%.
Shares in Hong Kong closed at a four-and-a-half year low, down 2.6% to 8,634. Investors in the territory are worried about not just the loss of human life but also the economic impact of the spreading SARS.
Airline stocks in Asia have been particularly hard hit over the past few days by concern over the impact of the disease. Cathay Pacific lost 6.4% to HK$9.55 yesterday and Singapore Airlines shed 3.3% to S$8.75. Malaysia Airlines lost 6.7% or 24 sen to RM3.32.
The situation in America and Europe was no better. A rally on hopes of a short Iraq war that lifted the Dow Jones Industrial Average and the Nasdaq into positive territory has petered out and reversed direction.
Both indices are down for the quarter, and judging by the futures market and European trading, the Dow and Nasdaq would end the quarter lower than the start of the year.
Shares in Europe have taken a beating for the first quarter as well, with the German DAX down severely. At press time, major European bourses were down more the 2%.
“Global markets have been exposed to so much negative news, much of it will be discounted. For the markets to recover, investors must also become less averse to risk,'' said UOB Kay Hian research head Lim Beng Leong.
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