Investors shun risk, buying
bonds and gold after news of
Bear Stearns fire sale.

ZHANG: Monday was a bleak day
for Asian investors, with both
stocks and the dollar tumbling
on fears of a global credit
squeeze.

News that U.S. bank JPMorgan
Chase will step in to buy the
ailing Bear Stearns sparked
fresh worries that
more

Investors shun risk, buying
bonds and gold after news of
Bear Stearns fire sale.

ZHANG: Monday was a bleak day
for Asian investors, with both
stocks and the dollar tumbling
on fears of a global credit
squeeze.

News that U.S. bank JPMorgan
Chase will step in to buy the
ailing Bear Stearns sparked
fresh worries that more
financial institutions were
suffering big losses. JP
Morgan will buy Bear Stearns,
which was hit hard by bad
subprime mortgage investments,
at a value of $2 a share. A
little over a year ago, in
January 2007, Bear Stearns was
trading at $170 per share.

Late on Sunday, the U.S.
Federal Reserve announced
fresh emergency measures to
stem a fast-spreading
financial crisis, including
another cut to the federal
discount rate, and the
decision to allow investment
firms to borrow money from the
Federal Reserve. Since its
founding in 1913, the Fed has
acted as a lender of last
resort for ordinary banks, and
will now be in effect doing
the same for major Wall Street
investment firms, for the time
being.

Neither piece of news was
reassuring to Asian investors.
Financials were among the
worst performers, but stocks
generally fell across the
board with exporters, like
Sony, also badly bruised.

Japan's Nikkei ended 3.7
percent down (11,788), tapping
a two-and-a-half year closing
low. Markets also fell in
Australia, South Korea,
Taiwan, and especially in Hong
Kong, where the Hang Seng lost
more than five percent. The
dollar was also a major
casualty, at one point falling
3 percent against the yen.

Gold, traditionally a safety
play, shot up to fresh record
highs above $1,030 an ounce.

Some analysts now believe the
United States is already in a
recession and may be headed
for a more severe downturn
than seen in recent memory. If
so, the impact is likely to be
felt across Asia, where
manufacturers produce a wide
range of goods for American
consumers.

Category People & Blogs

Tags Asia, Hit, Hard, by, Bear, Sterns, News, Investors, wall, street, JPMorgan, Chase, news, commentary, analysis