Nikkei plumbs new low as rout rolls on


Big banks are taking a battering on the Tokyo market Wednesday

Staff and wires

TOKYO, Japan (CNN) -- Japan's stock market is continuing to plunge Wednesday, with the key Nikkei average plumbing a new 19-year low as big banks take a hammering.

The market rout in the world's second largest economy follows a brutal day on Wall Street that saw the Dow lose more than 4 percent.

In Tokyo, the Nikkei 225 is down 1.28 percent to 9099.39 at the midday break, after going as far as 9065.93 in the morning. That was its lowest point since August 1983.

The broader Topix has fallen even more sharply, off 1.74 percent to 888.53. That took it through the 900 mark for the first time since December 1984.

Other markets in Asia are also lower as trading moves into Wednesday afternoon.

In South Korea, the Kospi is down almost 2 percent, Hong Kong, Taiwan, Australia and New Zealand are all off about 1 percent, and Singapore is down 1.22 percent.

Wall Street's fall


Taiwan is doing the best of the region's markets, but is still flat

The broad decline in the region comes after a heavy fall on Wall Street Tuesday, where the Dow Jones industrial average dipped 4.1 percent to 8308.5. That is its lowest since September 1998. (Full story)

Nasdaq gave up 3.88 percent to 1263.84 as fresh figures showed the U.S. manufacturing sector is starting to falter.

"We all know stocks are starting to look cheap. But it's like staring into a bottomless pit right now," Kazuyuki Naito, general manager of equities sales and trading at UFJ Tsubasa Securities, told Reuters news agency.

"Falls in global stocks are killing us. And the complete lack of any kind of policy response from the Japanese government is despairing. I think we'll drop below 9,000," he said.

Shares in Japan's big four banks, which are saddled by heavy bad debt loads, took a battering.

Mizuho, the world's largest bank by assets, at one point plunged 9 percent to 206,000 yen, adding to a 9.24 percent dive in the previous session. But it recovered a little and is off 3.5 percent to 218,000 yen, heading into the afternoon.

Sumitomo Mitsui Banking Corp is down the most of the big four, off 8.45 percent to 509 yen.

UFJ Holdings is down 6 percent and Mitsubishi Tokyo Financial Group is off 4.6 percent to 706,000 yen.

Threat to banks' capital base


Mobile telco NTT DoCoMo is down sharply, along with tech stocks

Japan's banks have massive shareholdings on their books. Falls in stocks threaten to eat into their capital base, stoking fears of financial instability in the run-up to the end of the fiscal first-half on September 30.

Blue-chip exporters joined the rout, after a key gauge of U.S. manufacturing activity released on Tuesday, the Institute for Supply Management index, showed a reading of 50.5 for August, unchanged from July.

The downbeat data was also enough to weaken the dollar by one percent to a three-week low against the yen. It is trading at 117.24 yen at midday in Asia.

Falls in the dollar eat into the overseas profits of Japan's high-tech exporters.

Consumer electronics leader Sony Corp, which relies on the U.S. for a large chunk of its sales, is down 3.6 percent to 4830 yen, a 10-month low.

Toshiba is off 2.84 percent to 376 yen. Mobile phone leader NTT DoCoMo is down sharply, losing 4.5 percent to 233,000 yen.

Japanese automakers weaker

In the automotive sector, second-ranked Honda Motor has fallen 1.42 percent to 2,770 yen, Nissan is off 1.44 percent to 824 yen and Toyota is down 1 percent to 2780 yen.

One of the morning's few bright spots was provided by Tokyo Electric Power Co Inc (TEPCO), which firmed 1.48 percent to 2,395 as investors snapped up defensive shares.

The power utility had dropped seven percent in a six-day losing skid after announcing it had failed to accurately report cracks in nuclear power plant reactors.

In Seoul, market heavyweight Samsung Electronics is down 2.1 percent to 326,500 won and investors' favorite SK Telecom is 2.7 percent easier at 231,000 won.

Hyundai Motor, the country's biggest automaker and a leading exporter, is 3.6 percent lower at 33,550 won.

Australia leaves rates on hold

In Australia, the market has succumbed to the regional malaise, with the S&P/ASX200 down 1.1 percent to 3108.8. On Tuesday it was one of just a handful of markets to close in the black.

But the sharp falls on Wall Street have had an impact, with market heavyweight News Corp down 3.6 percent to A$9.37. The media giant makes most of its revenue in the United States.

Big resources groups Rio Tinto and BHP Billiton are both down more than 3 percent. Coal exporter MIM has plunged 6 percent.

The market's fall came despite the central bank leaving interest rates on hold for a third straight month. (Full story)

In Hong Kong, banking leader HSBC is about 1.5 percent lower, and Singapore's DBS Group is showing a similar decline.

In Taiwan, chip foundry TSMC is 0.6 percent lower at T$48.40.