Quote:World stocks plunge after China sell-off

BangkokPost.com, Agencies

Tuesday's global market tumble continued on Wednesday, tracking the biggest fall on the Chinese stock market in a decade. Emerging markets were taking the brunt of the hit on fears of another global sell-off.

US stocks gave back their entire 2007 gains. The US Dow Jones index plummetted by more than 400 points and London's FTSE 100 posted sharp losses.

The Thai SET Index on Tuesday dropped 4.75 points or 0.69 per cent to 690.47.

Early Wednesday, New Zealand's benchmark stock index tumbled 3 per cent, taking its lead from global markets.

Australian stocks tumbled 3.5 per cent Wednesday. The benchmark ASX200 dropped 200 points, or 3.5 per cent, to 5,771.

Sarah Rubicon, an analyst with brokerage Goldman Sachs J B Were in Sydney, said there was no panic and that buyers had come back into the market to pick up stocks cheaply.

The sell-off was sparked by a near-9% slide on the Shanghai Composite Index, as investors worried that China may pass rules to limit demand for stocks.

The global decline began in China on Tuesday and spread to other stock exchanges.

Russ Koesterich, a portfolio manager at Barclays Global Investors, told the Bloomberg financial news agency that Tuesday's action was "a fairly violent sell-off."

The blue-chip Dow Jones Industrial Average dropped 416.02 points, or 3.29 per cent, to 12,216.24. The S&P 500 plunged 50.33 points, or 3.47 per cent, to 1,399.04. The technology-heavy Nasdaq Composite Index plummeted 96.65 points, or 3.86 per cent, to 2,407.87.

The US currency declined to 75.514 euro cents from 75.84 euro cents on Monday. The dollar fell against the Japanese currency to 117.9 yen from 120.61 yen on Monday.

Gold was off $9.55 to $676.20 per fine ounce.

The sharp slide came amid a tumble in global markets as fears about an economic slowdown in the United States and the end of the Chinese economic bubble sparked a global wave of selling.

Analysts at Briefing.com called the action "one of the worst days for stocks in recent memory."

"The sell-off in China continues to have a profound effect on stocks across the board, since the largest unwinding in the Shanghai Composite Index since 1997 leaves investors questioning the sustainability of stock gains everywhere," the analysts said in a note to clients.

Asia was dragged down by a plummeting Shanghai stock market, Wall Street slumped, and the main European indices showed falls of between 2.0-3.0 percent on average at the close.

Metal and mining stocks were particularly hard hit because of concerns about demand from China, which has been the driving force behind record prices for raw materials in recent years.

In London, the FTSE 100 lost 2.31 percent to close at 6,286.10 points, in Paris the CAC 40 shed 3.02 percent to 5,588.39 points while in Frankfurt the Dax fell 2.96 percent to 6,819.65 points.

Comments from former Federal Reserve chairman Alan Greenspan and rising tension about Iran's nuclear program also served to undermine investor confidence.

Greenspan had warned on Monday that the US economy had been expanding since 2001 and that there were signs that the current economic cycle was coming to an end.

Bangkok Post Feb. 28, 2007

. . . and I guess the Yuan pegged to the Dollar will do for some aftershocks on the foreign currency markets. Time they let it float.
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