Asian stock markets ended the first week of March pretty much as it started – weak. Share prices tumbled across the region on March 6 following yet another rout on Wall Street overnight. Thursday night’s 281-point loss sent the Dow Jones Industrial Average to its lowest level since April 1997 while the broader-based Standard & Poor’s 500 is now at its September 1996 lows.
Investor confidence was clobbered by the speculation that General Motors may soon be filing for bankruptcy. The beleaguered automaker had received some US$13.4 billion in government bailout money but is asking for more just to survive the year. The company is burning through its cash rapidly amid the sharp slump in car sales. General Motors reported almost US$31 billion losses in 2008.
The sell off was also partly attributed to expectations that Friday’s US employment report would mark the worst month for job losses since the start of the recession in December 2007.
Elsewhere, investors were disappointed that China did not announce any additional stimulus measures. The Chinese government did reiterate its 8% growth estimate for the year. But few are convinced that the country alone could lead the world out of its current slump.
Meanwhile, the Bank of England halved its interest rate to 0.5% while the European Central Bank lowered its rate to 1.5% – the lowest levels since both banks were founded. With interest rates in the US and Japan already near zero, governments are running out of alternatives with respect to monetary policies.
The KL Composite Index closed 11 points lower at 858.2. Big losers include blue chips Tanjong plc, MPI, Maybank and Public Bank. Market breadth was overwhelmingly negative throughout the day. At the close, losing counters outnumbered gaining ones by three to one.
Trading volume was razor thin as investors saw no incentive to enter the market. Just over 282 million shares were traded Friday.