Asian stock markets suffered huge losses on Thursday as foreign investors fled to safe havens amid concerns that the United States was scaling down stimulus measures.
Market sentiments were also dampened after the World Bank cut growth forecast for the global economy to 2.2 per cent this year, from its January estimate of 2.4 per cent. It cited deeper-than-expected recession in Europe and a slowdown in China and India for the downgrade.
Japan led the equities plunge in Asia, with the benchmark Nikkei 225 Stock Average losing 843.94 points, or 6.35 per cent, to end at 12,445.38. The broader-based Topix index was also down 52.37 points, or 4.78 per cent, at 1,044.17.
Hong Kong's Hang Seng Index shed 467.22 points, or 2.19 per cent, to finish at 20,877.04, while China's stocks dropped to a six-month low, losing 2.74 per cent to close at 2,148.36.
Taiwan's TAIEX index fell 2.03 per cent to end at a two-month low, while South Korea's KOSPI Index dropped 1.42 per cent.
Traders said fund managers were exiting Asian markets amid fears that the US Federal Reserve would scale back a massive bond-buying programme following signs of an improving economy.
The Federal Reserve has been spending 85 billion dollars a month to buy bonds to push down interest rates in a bid to prop up the US economy by triggering borrowing and spending.
But improved housing and jobs data have led analysts to believe that the central bank would soon cut back on the stimulus, which could trigger a collapse in prices as funds are withdrawn.
Uncertainty over the US monetary policy was worsened by the Bank of Japan's decision not to take fresh steps to reduce heightened volatility in domestic bonds.
The selloff also affected South-East Asian markets, with the Philippine Stock Exchange suffering the biggest decline, tumbling 6.75 per cent to close at a one-year low of 6,114.08.
"The dust has yet to settle on foreign selling," Philippine equities analyst Astro del Castillo said. "Fundamentally, there's nothing wrong with the economy. This is still because of the re-alignment of global funds to interests abroad."
The Stock Exchange of Thailand Index fell 2.1 per cent, while the Jakarta Stock Exchange Composite Index dropped 1.92 per cent and the Kuala Lumpur Composite Index lost 1.82 per cent.
Bank of Japan Governor Haruhiko Kuroda assured Japanese Prime Minister Shinzo Abe that it would take steps to boost the economy amid the volatility.
"I told the prime minister that the Bank of Japan, needless to say, will promote quantitative and qualitative monetary easing with a strong determination and will prop up the Japanese economy," he said.
"Volatility in the financial market will taper off gradually."
Most Popular Stories
- Microsoft Releases Free OneNote for Mac
- E.U. Puts Sanctions on Russia, Ukraine Officials
- Crimea Seeks Financial Integration With Russia
- Homebuilders Show Rising Confidence in Market
- Jack Daniel's Resists Changes to Tenn. Whiskey Law
- Apple, HP, Intel May Take a Hit from Slowdown in Smartphone Sales Growth
- Obama Imposes Sanctions on Russian Officials
- Chile Shaken by Major Aftershock
- Ford Flies High on Speed
- 'Walking Dead' Takes a Shocking Turn: Recap