Asian Stocks slump after attacks on Afghanistan

Asian Stocks slump after attacks on Afghanistan

Rita Raagas De Ramos, Dow Jones, Hong Kong

Asian stock markets closed sharply lower Monday, with investors opting to stay as liquid as possible following the launch of a U.S.-led military assault on Afghanistan.

The selloff ensued even though investors worldwide had braced for a U.S. retaliation for the Sept. 11 attacks on the Pentagon and the World Trade Center. The region's losses didn't raise alarm bells, however, as industry players considered them acceptable given the extraordinary circumstances.

"Considering what happened on Sept. 11 and the heightened expectations of some sort of war since then, I wouldn't consider a fluctuation of around 3 percent-5 percent abnormal," said Ted Chen, regional technical analyst at Indosuez W.I. Carr Securities, referring to losses in certain markets in the region.

Asia's stock markets were the first to open after the U.S.-led attack on Afghanistan began Sunday.

Song Seng Wun, regional analyst at G.K. Goh Private Research Ltd., said the U.S. and Europe would likely suffer more than Asia because of their direct involvement in the conflict.

Asian stock markets are expected to remain in negative territory in the coming days, likely taking their cue from U.S. stocks. Within Asia, investors are expected to look to Tokyo, which was closed Monday for a holiday, for direction.

Indonesia was the worst-performing stock market in Asia Monday in percentage terms, with the main JSX Composite Index ending down 3.8 percent at 367.073.

Shares on the Jakarta bourse ended sharply lower amid escalating anti-U.S. protests following the U.S.-led strikes on Afghanistan. The weaker rupiah, which at one point earlier in the day reached Rp 10,500 against the dollar, added to negative sentiment.

Amid new threats against Westerners living in the world's most populous Muslim nation, the U.S. and other Western countries have advised their citizens to stay at home in case violence breaks out.

The Philippines also suffered major losses on its stock market. The key Philippine Stock Exchange index lost 3.7 percent to 1048.67, its lowest close in nearly a decade. Traders say the index could fall to as low as 950 in the event of further Afghanistan-related uncertainty and Abu Sayyaf-linked violence.

G.K. Goh's Song said Indonesia and the Philippines, along with other Southeast Asian markets, will likely suffer more from any future selloffs in Asia. He noted that these markets are "very dependent on the external economy for growth."

In Singapore, for example, a further deterioration in the global economy would likely push the city state deeper into recession, Goh said. Singapore's Straits Times Index fell 2.6 percent to close at 13459.01.

In Hong Kong, the Hang Seng Index fell 3 percent to end 9967.83.