China accuses US of financial WMD
Chinese state media has blamed the US for unleashing financial "weapons of mass destruction" and sparking a global market "tsunami".
China's official People’s Daily warned on Wednesday that the US had set off a "financial tsunami" by allowing Wall Street lenders to trade in subprime debts and unstable financial derivatives.
In response to market turmoil, China's central bank cut interest rates for the first time in six years, from 5.85% to 5.31% signalling Beijing's intent to maintain economic growth and employment.
Regional stocks tumbled across East Asia on Thursday due to panic-selling brought on by fears of a financial meltdown on Wall Street.
The MSCI Asia Pacific Index of regional shares fell 4.1% on Thursday as traders in Hong Kong, Japan and China fled equity markets to safer investments such as gold, government bonds and currencies such as the Yen.
Thursday trading saw Japan's Nikkei 225 Stock Average falling 3.6% while the broader Topix index skidded 3.9%. Japan's central bank also pumped another Y1.5 trillion into money markets to fund banks increasingly wary about lending to each other.
Hong Kong's Hang Seng Index now stands at its lowest level in over two years after dropping 7.3% on Thursday and 15.2% in the previous six sessions. HSBC holdings and China Mobile, two of the biggest and most influential stocks on the Hong Kong market, lost 7.4% and 4.6% respectively.
The Shanghai Composite index in China crashed 5.8% while the Taiex in Taiwan sank 3.6%. South Korea’s Kospi index dropped 3.9% after hitting an 18-month low on Tuesday.
Signs of panic spread also spread to consumers with policyholders at troubled insurance giant AIG flocking to regional offices to terminate agreements despite an $85 billion US government bailout.
Asian markets have been hit hard all week after the collapse of investment bank Lehman Brothers and the forced discount sale of brokerage firm Merrill Lynch.
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