Tokyo, Hong Kong, London — Tokyo's Nikkei average tumbled 4 per cent to close at a four-month low on Wednesday with Advantest Corp. heading a tech-led decline following a plunge in the shares of U.S. telecoms company WorldCom Group Inc.
Intervention by the Bank of Japan in the afternoon to check the yen's rise failed to stem selling of blue-chip exporters and that fuelled the bearish mood.
The benchmark Nikkei average closed down 4.02 per cent or 422.11 points at 10,074.56, its lowest close since Feb. 20. It was the Nikkei's biggest percentage fall since Sept. 17, 2001, when it tumbled 5.04 per cent.
The capital-weighted TOPIX index gave up 3.16 per cent to 984.28.
Chip-related shares suffered a savage wave of selling, with chip-equipment maker Tokyo Electron Ltd. shedding 8.03 per cent to 7,100 yen and Advantest, Japan's top maker of chip-testing equipment, down 6.68 per cent at 6,850 yen.
The telecoms sector was hit particularly hard, with leading carrier Nippon Telegraph and Telephone Corp. off 3.38 per cent at 477,000 yen, and rival KDDI Corp. sliding 6.01 per cent to 344,000 yen.
Shares in WorldCom collapsed to 20 cents in after-hours trade after closing in the U.S. on Tuesday at 83 cents.
Triggering the free-fall was a report it engaged in massive fraud by inflating profits, raising the spectre of bankruptcy.
In mid-afternoon trade the dollar had firmed to 120.73 yen, after the Bank of Japan again intervened to stem the yen's rise.
Hong Kong — Hong Kong's benchmark index slumped 2.4 per cent to a seven-month closing low on Wednesday on growing concern about the outlook for global equities after earnings fears sent Wall Street tumbling and WorldCom's woes raised the prospect of a further slide.
The No. 2 U.S. long-distance carrier announced after the U.S. closing bell that it had fired its chief financial officer after uncovering improper accounting for almost $4-billion (U.S.) in expenses — echoing the Enron energy trader accounting scandal that has shaken U.S. markets this year.
All 33 blue-chip stocks lost ground. The United States is Hong Kong's second biggest export market and there were heavy losses for leading exporters Li & Fung, a consumer goods and garment supply chain manager, and micro-motor maker Johnson Electric Holdings.
Li & Fung tumbled 5.3 per cent to HK$9.80 while Johnson slipped 3.9 per cent to HK$8.60.
Meanwhile subway operator and property developer MTR Corp. took a beating after losing out to rival Kowloon-Canton Railway Corp. (KCRC) for a contract to build a HK$31-billion ($4-billion U.S.) rail-link from the suburban new town of Shatin to Hong Kong's central business district.
News that the government would postpone the second batch of its sale of shares in MTRC, planned for this year, to allow it time to conduct a feasibility study on merging MTRC with KCRC failed to help the stock.
MTRC tumbled 6.5 per cent to HK$10.15, its lowest level since January.
The Hang Seng Index shed 2.4 per cent, or 253.06 points, to 10,355.92, breaking major support at 10,400 and falling as low as 10,291.16 at one point.
Turnover jumped to HK$10.2-billion, from a 20-day average of HK$6.9-billion.
The index has now lost 9 per cent in three weeks and analysts say it could yet hit 10,000 if sentiment deteriorates.
Hong Kong routinely tracks U.S. interest rate moves because of its currency peg to the U.S. dollar and jitters about the U.S. economy make it unlikely the Federal Reserve will raise rates at the end of a two-day meeting on Wednesday, analysts said.
Property stocks were punished along with the rest of the market on Wednesday though with the Hang Seng properties sub-index losing 2.4 per cent to 13,734.82.
But they fared better than some technology stocks, including Legend Group, which was thrashed on a sell-off in U.S. tech plays on profit warnings.
Legend, China's biggest computer maker, dived 5.8 per cent to HK$2.825.
Away from blue chips, bargain hunting was scarce.
Another noticeable loser was Asian foods-to-telecoms conglomerate First Pacific, which slumped 7.8 per cent to HK$1.41, after it said it is still in talks with Japanese telecom giant Nippon Telegraph and Telephone, which has the right to veto its plan to sell its stake in Philippine Long Distance Telephone Co.
London — Britain's top 100 shares all fell on Wednesday morning as investor confidence cracked under the strain of news of a $4-billion (U.S.) accounting scandal at U.S. long distance telephone and data services firm WorldCom.
Banking, telecom and oil shares led the FT-SE sell-off with major telecom firms Vodafone Group Plc, Cable & Wireless and mmO2 tumbling to multiyear lows, down over 4 per cent each.
Late on Tuesday WorldCom said it uncovered improper accounting for almost $4-billion (U.S.) in expenses and would restate results for 2001 and the first quarter of 2002 to show net losses in one of the largest revisions ever.
By 0834 GMT, the blue-chip index was a sea of red, down 132.3 points or 2.8 per cent at 4,498.7 as 485 million shares changed hands and £36-billion was wiped off the value of U.K. Plc. Earlier the index plunged 4 per cent to 4,442.9, its lowest since Sept. 21.
Dealers said the FT-SE now looked poised to topple through September's four-year low of 4,219.8 after a Tuesday's glimmer of a rally was snuffed out by the WorldCom news.
The market had rallied 100 points on Tuesday but is now on course to end the first half of this year some 14 per cent below where it started.
Banks wiped 43 points off the FT-SE as market players gauged how much exposure they have to WorldCom. HSBC, Lloyds and Barclays fell over 3 per cent each with dealers suggesting that Barclay's exposure could be around $714-million (U.S.).
No one from Barclays was immediately available for comment.
Insurers also packed the FT-SE 100 losersboard as investors worried that they may reduce their equity portfolios to meet stringent U.K. solvency requirements.
Friends Provident lost 7 per cent, dropping to 127 pence. Royal & Sun Alliance lost 6 per cent and Prudential was off 5.4 per cent.
Prudential said it also had no plans to sell equities. "We are absolutely comfortable with our asset mix."
Dealers said that sentiment was driving the market and despite positive corporate and economic news refused to budge off recent nine-month lows, but once the market did turn there would be a huge spike up.
U.S. futures were down 188 points for the Dow Jones September contract on Wednesday indicating just how badly investors believe markets will be hit.
U.K. telecom and technology shares bore the brunt of the fall compounded by after-hours news from U.S. computer memory chip giant Micron Technology that it had reported an unexpected third-quarter loss, continuing a string of money-losing quarters, dealers said.
ARM Holdings and Sage dropped sharply, while the FT-SE techMARK skidded to an all-time low of 822.4, off 4.2 per cent.
WorldCom fallout aside, Britain's biggest electrical retailer reported a 7 per cent rise in its full-year profits and current sales were in line with expectations, despite the downturn in the U.K. mobile phone and PC markets.
The FT-SE mid-cap 250 index was down nearly 3 per cent at 5,382.9.
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