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Asian Financial Markets Continue Selling Shares


The unrest in London was among the things markets in Asia may have been reacting to today along with the ongoing debt question in the U.S. and Europe. When the trading day opened in Asia, stocks took a nosedive. In Seoul shares fell nearly 10 percent before closing around three and a half percent lower. The Nikkei closed down 1.7 percent after initially taking a much bigger dip.

Robert Cookson is Asia market's correspondent for the Financial Times. He's been following the tumultuous trading from Hong Kong and is with us on the line now. Welcome to the program.

Mr. ROBERT COOKSON (Financial Times): Thank you. Good to be here.

MONTAGNE: Now I get - OK, good. I gather shares in Hong Kong pulled back after seeing losses of around eight percent, but generally speaking, what are the key things that you see behind this huge selloff throughout the region?

Mr. COOKSON: Well, essentially the region has been infected by the scare that we saw in yesterday's session in the U.S., a 6.6 percent slide in the S&P500. And the reality is that for all the talk of sort of the distract of Asia the region remains incredibly closely linked to Europe and the U.S., so what's happening in Europe and the U.S. is feeding through here. So essentially it's a simple reaction to what's happened overnight in America.

MONTAGNE: Right. I've heard today the expression negative feedback loop.

Mr. COOKSON: Well, there's all sorts of feedback loops in the markets. I mean certainly the four that you mentioned in Hong Kong, at one point it was down eight percent. In Korea, stocks were at one point down as much as ten percent. Now those falls are clearly much more dramatic than anything we've saw elsewhere in the region or in the U.S.

And what might be going on here is the fact that negative feedback loops where investors have bought stocks using debt. The declines in those stocks then mean that the lenders, the banks of the brokers will force them to either put up more cash to fund their positions or to - or they'll just simply have to liquidate their positions, forcing. So it seems there's a lot of that going on as well, which means the market moves are much more violent than you might ordinarily see.

MONTAGNE: Although there's been a sense throughout the financial crisis that Asia is robust.

Mr. COOKSON: Yeah, well, I mean Asia clearly is robust in the sense that if you walk the streets out here business is clearly booming, people's lives are generally improving. There's a lot of activity. The banks here, unlike in the west, are lending, the whole credit growth cycle, you know it continues the pace.

But the reality is business out here is still very much linked to exports to the U.S., to Europe. And the financial markets are also incredibly closely linked. I mean a lot of businesses out here are funded by, you know, the global system in which dollars are shuffled from the west to the east.

So really the global economy acts as one. If there's a real problem in the U.S. or Europe, inevitably Asia will suffer.

MOTNAGNE: Now we just have 20 seconds left here. Tell us - if you can have a quick answer to in the near term what would turn sentiment around in Asia?

Mr. COOKSON: The big thing everyone's looking for in Asia and also everywhere else in the world is the Federal Reserve meeting later. People are wondering whether they might come out with a statement about something that they might do to help stabilize markets.

MONTAGNE: Good, thanks.

Mr. COOKSON: That will be the number one.

MONTAGNE: Thank you very much. Robert Cookson is Asia market's correspondent for the Financial Times speaking to us from Hong Kong.

This is MORNING EDITION from NPR News. Transcript provided by NPR, Copyright NPR.