HONG KONG (MarketWatch) -- Japanese shares tumbled Thursday, sending the Nikkei 225 Average slumping 10% in the afternoon as investors sold off equities, fearing the impact of a U.S. recession and a slowing global economy.
The Nikkei 225 Average dropped as much as 10.4% in mid-morning Tokyo trading, before recovering, as shares across the board were slammed after Wall Street stocks dived overnight. The benchmark was recently down 10% at 8,589.57, while the broader Topix index shed 8% to 879.48.
In Hong Kong, the Hang Seng Index dropped 7.6% to 14,787.35, while the Hang Seng China Enterprises Index lost 9.9% to 7,115.45. On mainland China, the Shanghai Composite declined 3.7% to 1,921.28.
Australia's S&P/ASX 200 index lost 6.9% to 4,004.80, with shares of resources giant Rio Tinto tumbled more than 14% in Sydney on concerns global demand for commodities was weakening.
"Certainly, the outlook is for a global recession, but you could argue that the markets' pricing last week already reflected that," said David Cohen, director of Asian economic forecasting at Action Economics in Singapore. "There is no reason why the world economy has to melt down. There are still some stabilizing influences, including the lowering of oil prices."
Elsewhere, New Zealand's NZX 50 index gave up 4.8% to 2,764.69, South Korea's Kospi slumped 7.5% to 1,240.46, Singapore's Straits Times index lost 6.6% to 1,924.82 and Taiwan's Taiex shed 3.3% to 5,075.95.
India's Sensitive Index, or Sensex, tumbled 6% to 10,165.41 in early trading.
Cohen added it "wouldn't be surprising" if governments in Asia decided to increase spending or introduce other stimulus measures such as tax cuts to support their slowing economies.
"I think the Asian economies are less vulnerable to financial instabilities now than they were 10 years ago," said Cohen. With a few countries in the region running current account surpluses and accumulating international reserves, "Asia has a little more flexibility and they don't have to fear that their financial position will crumble," he added.
Regional detail
Shares of Rio Tinto tumbled 14.8% in Sydney a day after the resources giant said the global financial crisis will force it to delay a planned sale of $10 billion of assets. The company added that China wasn't immune to the global downturn and it may freeze capital expenditure as it reassesses commodity demand amid a looming global slowdown. See full story
Shares of regional exporters tumbled on worries about slowing global demand, with Honda Motor Co. shedding 8.1% and Sony Corp. losing 10.5% in Tokyo, while Hyundai Motor Co. lost 10.5% in Seoul.
Shares of Mazda Motor Corp. fell 3.5%, on top of their 9.2% decline Wednesday, after the Nikkei business daily reported that U.S. automaker Ford Motor Co. has asked Denso Corp. to purchase a part of its 33.4% stake in Mazda. The report added that Denso, which wants to expand business with Mazda, is likely to consider purchasing some of the stake.
Steelmakers and shipping stocks also dropped sharply on worries about global demand, with JFE Holdings Inc. shrinking 13.1% in Tokyo and Mitsui O.S.K. Lines losing 14.5% in Tokyo. In Seoul, Posco gave up 14.4%, while STX Pan Ocean Co fell 13.3%. In Shanghai, shares of Baoshan Iron & Steel dropped 2.5%, while China Cosco Holdings Co shed 8.2%.
