• RP stocks lose 8.3%
• Asia follows in carnage
• Wall St. clobbered

SHARE prices throughout the world were routed yesterday, including the local market which saw the Philippine Stock Exchange Index plummeting by 8.3 percent.

In one week, the Philippine stock market lost 18.25 percent or P888 billion of its market value.

The peso also retreated, closing at 47.69 to the US dollar, down from Thursday’s close of 47.39. The total value of transactions at the Philippine Dealing System hit over $1 billion for the first time in history, from $600 million to $700 million in previous days.

Analysts said the demand for dollars was primarily from importers, with probably some fund managers getting into the action to take advantage of the high rates abroad on short-term dollar borrowings at 5 percent over London interbank rates.

They said the high volume is not worrisome and, on the contrary, reassuring because it shows there are enough dollars in the system.

Asian markets followed the carnage in Wall Street after the Dow fell below 8,600 for the first time since May 2003 and down almost 40 percent from its all-time closing high hit exactly one year ago. The Nasdaq and the S&P 500 each also fell to levels not seen in more than five years.

Japan’s Nikkei average tumbled more than 11 percent, leaving it facing the biggest one-day drop since a 1987 crash.

"It’s not about technicals, it is not about fundamentals, it’s about sentiment," said Richard Oleta, a broker with A.T De Castro Securities.

"It is a period of pessimism but then again there is always light at the end of the tunnel. But you’ll never know how long the tunnel will be," he said.

The PSEi shed 190.64 points to 2,097.80, its biggest single-day decline for the year after it lost 4.8 percent or 116.45 points last Wednesday.

Down were most actively traded Philippine Long Distance Telephone Co. by P210 to P2,245, SM Investment Corp. by P2 to P236, Ayala Corp. by P2.30 to P26, Bank of the Philippine Islands by P3.50 to P37, Globe Telecom by P75 to P930, Energy Development Corp. by P0.35 to P3.05, Ayala Land by P0.80 to P7 and Megaworld Corp. by P0.16 to P1.04.

Singapore’s Straits Times Index fell 7.1 percent in afternoon trading to 1,953.7 points, after a 7.5 percent drop earlier as the city-state sank into its first recession in six years, government estimates showed on Friday.

Thailand stocks lost 8 percent. Malaysian stocks declined 3.2 percent, while Vietnam lost 4.7 percent.

Indonesia escaped the bloodshed by keeping its market closed for the third consecutive day after a sharp drop in Tuesday.

In Tokyo, the Nikkei average tumbled 10.1 percent, heading for its biggest one-day drop since the 1987 stock market crash and its seventh straight day of losses, on fears the financial crisis will lead to a global recession.

The early stock sell-off led the Osaka Stock Exchange to trigger a circuit-breaker and briefly halt trade in Nikkei futures.

A bankruptcy filing by unlisted Yamato Life Insurance shocked the market, given that Japan’s financial institutions had appeared to be relatively resilient to the credit crisis tearing through the United States and Europe.

Amid the worsening sentiment, the benchmark Nikkei sank 934.83 points to 8,222.66. At one stage, it hit its lowest point since May 2003.

If it finishes at this level, it will surpass a 9.4 percent fall in the Nikkei earlier this week. During the 1987 crash, the Nikkei at one point fell 14.9 percent in a single day.

"The Nikkei has lost close to 20 percent in three days alone, and it’s certainly not as if economic fundamentals have worsened that much in that time period," said Hiroaki Osakabe, a fund manager at Chibagin Asset Management.

"It’s basically all psychological. And it’s not going to stop until fears about the financial system have been erased."

Bank and insurance stocks got hammered worldwide, as the previous day’s coordinated global interest-rate cuts and myriad other official actions to unfreeze money markets did little to boost confidence in the financial sector. Some traders said the lifting of the ban on bets that financial stocks will drop might have contributed to the sell-off.

Credit markets remained clogged. The interbank cost of borrowing dollars for any period beyond overnight rocketed — three-month dollar Libor hit its highest this year.

The Dow Jones industrial average dropped 678.91 points, or 7.33 percent, to 8,579.19, while the Standard & Poor’s 500 Index plummeted 75.02 points, or 7.62 percent, to 909.92. The Nasdaq Composite Index sank 95.21 points, or 5.47 percent, to 1,645.12.

The Dow average has lost 2,271.47 points in the last seven trading days — the worst ever in such a period. Since its record closing high a year ago today, the Dow has tumbled 5,585.34 points — or almost 40 percent.

In the latest attempt to instill confidence in the financial system, the US and Dutch governments readied on Thursday public funds to shore up the capital of banks, matching a similar move this week by Britain.

The US Treasury plans to start injecting capital in US banks soon, according to a financial policy source familiar with Treasury Secretary Henry Paulson’s thinking.

That partial nationalization of American banks would represent an enlarged role for the US government as the lender and investor of last resort.

"The market is in a phase now that it doesn’t believe in anything," said Sasha Kostadinov, a fund manager and analyst for Shaker Investments in Cleveland, Ohio. "I don’t know what will turn the sentiment."

"With no visible sign of restoration of normal credit movement, that is shaking investor confidence that the banking system at this point still has a long way to go before it gets fixed," said Frederic Dickson, senior vice president and market strategist at D.A. Davidson & Co., in Lake Oswego, Oregon.

Dickson also noted that margin calls and hedge fund liquidations might be exacerbating selling as the stock market falls.

The punishing decline in US stocks added to pressure on policy makers to do more to stem the crisis — even after approval of a $700 billion US bailout fund and an emergency rate cut by central banks over the past week.

This week, central banks from Europe and the United States to China, South Korea and Taiwan have slashed interest rates, as fears of inflation recede into worries about economic growth.