Asian stock markets may not hold up much longer

Another big fall in U.S. stock markets. Despite the Fed invoking its emergency powers to lend money to companies outside the financial sector and buy up mounds of commercial paper, the DJIA dropped 508 points to close at 9447 (see Chart 1 below).


Chart 1: DJIA's daily chart as at October 7, 2008 (Source: Stockcharts.com)

It is interesting to note that the Asian markets have been rather resilient to the fall in DJIA. On September 18 & October 7- the days after DJIA dropped by 777 points & 367 points, respectively- the Asian markets were able to recover from their earlier morning decline. We will have to wait & see whether today will be more of the same or maybe the Asian markets will finally succumb to the selloff on Wall Street.

As at 12.30 noon, the KLCI declined by 23 points to 974 (see Chart 2 below) while the Hang Seng Index dropped 932 points to 15872 (see Chart 3 below). That means that Hang Seng index is now below the low of about 16300 recorded on September 18, while our KLCI is still able to stay above the low of 963 recorded on the same day.


Chart 2: KLCI's daily chart as at October 7, 2008 (source: Quickcharts)


Chart 3: HSI's daily chart as at October 7, 2008 (Source: Stockcharts.com)

The U.S. financial crisis has morphed into the Atlantic Financial Crisis-- much like how the Thai financial crisis of 1998 turned into the Asian Financial Crisis of 1998. Regardless of the actions taken by the governments of the day, the market & the economy continue to plummet. When is this going to end?