DUBAI/LONDON, 22 January 2008 — Global stock markets plunged yesterday, with Tokyo tumbling to its lowest level in more than two years as US President George W. Bush’s tax plan to revive the world’s largest economy disappointed investors.
After heavy losses in Asian trade, it was the turn of the European markets to suffer, with the main bourses posting losses of between three and five percent by midday as investors headed for the exits, dealers said.
They said that after high hopes that Bush would announce strong measures to prevent the US economy going into recession, the markets did not find enough to offset all the bad news coming through on the banks and the collapse of the US housing market.
“Investor skepticism over the impact of a temporary tax cut in saving the US economy from a sharp slowdown in economic growth prompted heavy selling in equities,” said Derek Halpenny of The Bank of Tokyo-Mitsubishi in London.
Tokyo’s benchmark index closed down a hefty 3.86 percent, hitting the lowest point since October 2005. London’s FTSE 100 meanwhile dived 3.83 percent in morning trade as it fell under 5,700 points for the first time since July 2006.
Arab stock indexes plunged as well. Qatar’s main index suffered its biggest one-day fall in 18 months, and Dubai’s main index its sharpest in 14 months.
“Concerns of US economic slowdown have pushed foreign institutions to realize profits in Arab markets,” said Sharif Abdul Khalek, dealing room manager at investment bank EFG-Hermes.
In the Kingdom, shares of Saudi Basic Industries Corp. (SABIC) plunged almost 8 percent to SR181 ($48.27), its lowest in more than a month.
SABIC missed fourth-quarter earnings forecasts and said the impact of the US mortgage crisis on the US economy had hurt demand for chemicals.
Elsewhere, Indian stocks tumbled 7.41 percent, South Korea closed down 3.0 percent at a five-month low, Singapore shed 6.03 percent and Sydney lost 2.9 percent.