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%.
In the financial sector, Mizuho Financial Group lost 11.7% and Sumitomo Mitsui Financial Group slumped 12.9% in Tokyo, while Macquarie Group lost 8% in Sydney. Market heavyweight HSBC Holdings lost 3.9% in Hong Kong and DBS Group Holdings fell 5.5% in Singapore.
In Seoul, shares of Korea Exchange Bank tumbled 10.2%, Woori Finance Holdings Co. skidded 14.3% and Shinhan Financial Group Co. plummeted 13.4%, a day after Standard & Poor's placed seven financial institutions on credit watch for downgrades, including KEB, Woori Bank and Shinhan Bank.
Shares of Citigroup Inc. lost 10.7% in Tokyo after the Nikkei business daily reported the banking giant is considering delaying the merger of its retail brokerage firm Nikko Cordial Securities Inc. with its corporate securities business Nikko Citigroup.
Energy-related stocks tumbled after November crude-oil futures fell as much as $4.09 to $74.54 a barrel on the New York Mercantile Exchange overnight, ending at their weakest level in more than a year. The front-month contract recently dropped as much as $1.21 to $73.33 a barrel in electronic trading.
Shares of BHP Billiton gave up 13% and Woodside Petroleum lost 3.1% in Sydney. Commodity trader Mitsubishi Corp. ) declined 14.7% in Tokyo, while shares of Cnooc sank 12.8% in Hong Kong.
The drop in Woodside shares came although the company announced an 84% jump in third-quarter revenue on increased production and higher oil prices.
In Asian currency trading, the U.S. dollar bought 99.79 yen, compared with 101.34 yen late Wednesday.
On Wall Street, the Dow Jones Industrial Average tumbled 7.9% to 8,577.91 and the S&P 500 index skidded 9% at 907.84, while the Nasdaq Composite shrank 8.5% to 1,628.33.
