Thai Stock Index Plummets, Hits lowest since 2003, US financial turmoil sends stocks to sharp lows

Thai stock index plummets, heading to lowest since 2007

BANGKOK: -- Thai shares plummeted 3.57 per cent at 11.20 am in Thailand time, jerked by Lehman Brothers Holdings Inc's collapse. They headed for its lowest close since Jan. 10, 2007.

The SET index started the day with a sharp drop and heded south further to hit the day's low at 617.67 before rebounding slightly to 619.44 points.

Banking stocks were the biggest losers. Bangkok Bank (BBL) fell 5.45 per cent at Bt104,

Kasikornbank (KBANK) was off 3.85 per cent at Bt62.50, Siam Commercial Bank (SCB) was down 6.21 per cent at Bt68 and Bank of Ayudhya (BAY) lost 4.74 per cent at Bt18.10.

Other stock markets in Asia also caught the cold. Hong Kong's Hang Seng slumped 5.6 per cent, Taiwan stock market sank 4.45 per cent, while other bourses declined in a range of 2-4 per cent.

-- The Nation 2008-09-16

US financial turmoil sends stocks to sharp lows

New York/Washington: -- The bankruptcy of Lehman Brothers Holdings Inc and fears of more looming bank failures sent US investors running for the hills Monday in the latest sign of a deepening credit crisis in the United States.

Monday's trading on Wall Street saw the steepest selloff since the lending crunch began last year, as the blue-chip Dow Jones Industrial Average tumbled more than 500 points - some 4.4 per cent - in its biggest one-day drop since October 2002.

The broader Standard & Poor's 500 Index plunged more than 4.7 per cent for its lowest close since October 2005 and sharpest drop since the September 2001 attacks.

News of the venerable Lehman Brothers' failure came hours after financial services firm Merrill Lynch & Co agreed to a takeover by Bank of America Corp - the product of a frantic weekend of talks.

Negotiations throughout the weekend failed to produce a buyer for the 158-year-old Lehman Brothers, after the US Treasury refused to risk taxpayer money to facilitate a deal, leading to the fourth-largest US investment bank's bankruptcy filing in the morning.

The developments in the US earlier sent stocks in Asia and Europe into a nosedive as fears of further bank failures in the world's largest economy spread throughout global markets.

Other financial firms under threat included bank Washington Mutual and American International Group Inc, the largest US insurer. AIG reportedly needs to raise 20 billion dollars in capital and sell another 20 billion dollars in assets.

The US Federal Reserve Board, the rate-setting central bank, asked finance giants Goldman Sachs Group Inc and JP Morgan Chase to help make up to 75 billion dollars in short-term financing available to AIG, US media reported. Shares in AIG were down more than 60 per cent Monday.

In a surprising deal announced late Sunday, Merrill Lynch, a stock brokerage and investment bank, agreed to be bought out by Bank of America for 50 billion dollars in stock.

Bank of America chief executive Kenneth Lewis said Monday that the acquisition left the banking giant best positioned to weather the financial storm that he said was unlikely to end before 2010.

"The combined company is a much stronger entity and will survive almost anything as a result of the combination," Lewis said.

Bank of America's share price plunged 20 per cent Monday.

The Dow industrials fell 504.48 points, or 4.42 per cent, to 10,917.51. The S&P 500 was down 59 points, or 4.71 per cent, to 1,192.7.The technology-heavy Nasdaq Composite Index plunged 81.36 points, or 3.6 per cent, to 2,179.91.

The US currency fell to 70.13 euro cents from 70.30 euro cents on Friday. The dollar plunged against the Japanese currency to 104.86 yen from 107.94 yen on Friday, its largest one-day decline since 1999.

Bank of America had reportedly been in talks to acquire Lehman, which became the largest casualty to date after more than a year of turmoil arising from the bursting of the US housing bubble.

A record rate of home foreclosures has severely undermined Wall Street's market for mortgage-backed securities. Many banks had been taking on greater debt in the last decade without maintaining enough cash reserves to meet a sharp downturn.

Banks and mortgage lenders have already reported more than 500 billion dollars in losses and writedowns off bad debt from the crisis. The International Monetary Fund has forecast 1 trillion dollars in total losses.

President George W Bush warned that "painful" short-term adjustments were needed in the financial sector but insisted economic fundamentals remained strong.

Banks took out 70 billion dollars in short-term loans from the Federal Reserve on Monday - the largest one-day injection of Fed reserves into the financial system since September 2001. The Fed had announced Sunday that it would accept a wider array of securities as collateral for loans.

A group of 10 major banks on Sunday set up an independent 70-billion-dollar fund that each could tap into in emergencies.

On Tuesday, the Fed's Board of Governors in a previously scheduled meeting will decide whether to slash interest rates to keep credit available to US companies and consumers.

Earlier this year, the Fed helped engineer the sale of another troubled investment banking firm, Bear Stearns. More recently, the federal government acted to take over the government-chartered mortgage facilitators Fannie Mae and Freddie Mac, which undergird the mortgage-backed securities markets.

The Bear Stearns and Fannie-Freddie bailouts could cost taxpayers as much as 200 billion dollars.

Paulson defended his decision not to rescue Lehman, saying the situation was "very different" from that of Bear Stearns.

"I never once considered that it was appropriate to put taxpayer money on the line" for Lehman, Paulson told reporters, but he would not rule out the possibility of other bailouts in the future.

-- dpa 2008-09-16

Interesting to know what this means for AIA Thailand (100% AIG owned). They have millions of policies here.... Thai english speaking media have not written a word about it.

My wife could not find out anything from our (Thai speaking) broker (yet).

Anybody?

When the USA sneezes Thailand catches Dengue Fever.

http://www.aiathailand.com/

AIA is a daughter of AIG and will certainly be effected; they will probably bought by another company/insurer and nothing will be changed in the present policies....unless AIG will be declared 100% bankrupt.
In that case it remains to be seen what the small letters in the contract/owership say...

You have no other option then to sit and wait, I'm afraid.

AIG is such a Giant that a single person can't do very much.

http://www.aig.com/gateway/home/1-59-Thailand_index.htm

LaoPo

This is terrible folks. I'm not even sure how this mess will get sorted out. Btw, there are still ARM and other financial instruments that have NOT been sorted out yet. We are not even half-way through this crisis.

Indeed. USD LIBOR rates doubled today in London. Pity the poor sod who's LIBOR-based loan was refixed today. I'm just glad I'm not in interest rate derivatives anymore...

I was always told that credit swaps were sold into the tertiary market and that we would never know who the final guy was holding the bag if they defaulted. I think we found them in NY.

My wife insisted that I buy insurance for the whole family. Those that you pay them annually for 10 years, and get the money back plus benefit on year 15. So far a lot of dosh have been deposited. If AIA/AIG go down, what will happen to my dosh?

"Thai Stock Index Plummets" ---

This is nothing compared to what will happen if AIG falls,

More like Financial Disaster,


Singapore says local AIG unit can meet liabilities

The Associated Press\ September 16, 2008

SINGAPORE: Singapore's central bank said Tuesday the local unit of embattled

insurance giant American International Group Inc. has sufficient assets to meet its

liabilities as nervous policyholders lined up outside the company's offices.

http://www.iht.com/articles/ap/2008/09/16/...ngapore-AIG.php

Just how BIG is AIG Global Business Network

Interactive map illustrates,

AIG's extensive worldwide network

http://www.aigcorporate.com/corpsite/worldwide.html

This post has been edited by nickh: 2008-09-16 23:42:15

UPDATE: Russian Stock Trade Halted In Biggest Drop Since '98

Dow Jones September 16, 2008: 12:19 PM EST

By Andrew Langley and Will Bland Of DOW JONES NEWSWIRESMOSCOW

-(Dow Jones)- Russian stocks suffered their worst day in 10 years Tuesday after fallout

from Lehman Brothers' demise and concerns over banking sector liquidity prompted a

fresh wave of brutal selling.

http://money.cnn.com/news/newsfeeds/articl...25_FORTUNE5.htm

5 questions: Why AIG matters to you

I have insurance through AIG. How worried should I be about the problems at the company?

http://money.cnn.com/2008/09/16/news/compa...sion=2008091612

Update:

5 questions: Why AIG matters to you

http://money.cnn.com/2008/09/16/news/compa...sion=2008091612

LaoPo

Fed to give AIG $85 billion loan and take 80% stake

By Michael J. De La Merced and Eric Dash:

September 17, 2008

In an extraordinary turn, the Federal Reserve agreed Tuesday night to take a nearly 80

percent stake in the troubled giant insurance company, the American International

Group, in exchange for an $85 billion loan.

http://www.iht.com/articles/2008/09/17/business/17insure.php

Disturbing News From London

By GRAEME WILSON Deputy Political Editor Published:

16 Sep 2008

MILLIONS of Brits faced a grim outlook last night after America's fourth biggest

investment bank Lehman Brothers went bust.

The shockwaves sent share prices plummeting in London and experts warned...

http://www.thesun.co.uk/sol/homepage/news/...icle1694584.ece

That US85B is a LOAN.

This is what the BKK Post (finally!) put on their front page today:

"Voravan Tarapoom, president of the Association of Investment Management Companies, warned that a collapse of AIG could potentially affect AIA, which in turn would have huge ramifications for the Thai economy and public.

''Under the Insurance Act, there is no explicit guarantee given for policyholders. Customers might believe that their funds are 100% safe, but they are not,'' she said.

Mrs Voravan, also managing director of BBL Asset Management, said authorities need to have a clear contingency plan in place in case an event affected AIG and AIA."

Means we are NOT protected.
According to my wife AIA was going to send a letter to all their customers (today?). I would like to see an English version, plus look for clarification of the statement above.

This post has been edited by wimster: 2008-09-17 08:17:20

I have been shorting all investment banks for months now. They are all going to go bust, every single one of them is crooked and have been hiding bad balance sheets for years.

Yes they will go bust if everyone keeps shorting them! The next step is that customers get nervous and there is a run on the bank and voila, a self fulfilling prophecy - case in point Northern Rock and I suspect before too long, HBOS.

Don't blame the customers Chiang Mai; blame the Banks and their crooks who invented the cardhouse back in the States.

HBOS ?? (IMG:style_emoticons/default/huh.gif) who's that ?

LaoPo

Barkley's is taking Lehman assets.
USA is shoring up AIG. to 85 BILLION dollars of bridging loans.

Sounds like 1998 Thailand and certain vilified media guys.
BUT the numbers are 200 times as big.

A government asleep at the switch for 8 years of deregulation,
allows basic markets to run amuck and then bails out
and forgives huge chunks of money to keepo the WHOLE SYSTEM
running.

Thailand post Jul 2nd 1997
Government allows un regulated markets to over extend credit to the bleeding edge,
and then nit-wittedly unwittingly pulls the plug and can't put it back in the drain.

Then goes into salvage mode and leans on banks to help prop up the system,
and get functional players they have screwed royally back on the game plan.

And NO DOUBT a few insiders knew this was coming
and changed tactics JUST before the balloon went up.

Don't blame Sondhi Chiang Mai; blame the Banks and their crooks who invented the cardhouse back in Bangkok.

Point, set, match.

This post has been edited by animatic: 2008-09-17 09:23:07

Are the hospitals open yet Animatic ? Maybe see a doctor ?

LaoPo

Fed Resists Pressure to Cut Rates

The US Federal Reserve resisted Wall Street pressure to cut interest rates, even as deep fears continued to hang over financial markets.

The American central bank's policy committee, in its first unanimous vote since last September, decided last night (Thai time) to leave the federal-funds rate, at which banks lend to each other overnight, unchanged at 2%. The Fed's stance suggests little interest in fighting the financial crisis with more interest-rate cuts.

Source: Thai National News Bureau Public Relations Department - 17 September 2008

Lehman’s Meltdown Sent Shockwave to SET

A day after a financial tsunami overtook US’ Lehman and forced the sale of Merrill Lynch in the biggest financial industry shake-up since the Great Depression in the US, investors across the globe keep worried eyes on stock markets. Thai stock exchange, already aggravated by prevailing uncertain local politics, kept declining this morning by almost 4%.

The steep decline in U.S. stocks sent Asian stock markets, including Thailand’s SET, tumbling sharply Tuesday as investors were rattled by concerns over an expanding global financial crisis.

The Stock Exchange of Thailand (SET) index kept declining from Monday since eruption of the news on Lehman’s meltdown on Monday. SET index this morning kept declining, shedding additional 24.63 points decreasing 3.77%, to its lowest level in more than 20 months.

Foreign investors still loaded Thai stocks for sell this morning, to patch up their losses elsewhere in the world.

Mr. Montri Sornpaisal, chief executive officer of Kim Eng Securities (Thailand), a unit of Singapore-base Kim Eng group, attributed the declining in the Thai stock exchange during the past two days to news of Lehman Brothers’ meltdown which have sent shockwaves to financial markets worldwide.

Local political situation of which the focus is still on the choice of new prime minister was another negative repercussion against Thai stocks, he added, although it was somewhat eased by resignation of former premier Samak Sundaravej and lifting of local emergency decree.

So far this year, the SET index has shed more than 200 points. Foreign investors have sold out in excess of 100 billion baht. The Thai exchange’s market capitalization have decreased a hefty almost 1.50 trillion baht, to a mere around five trillion baht.

Elsewhere, Japan's benchmark Nikkei 225 stock index fell this morning 4.8% to 11,632.99, falling under 12,000-point level for the first time since mid-March.

South Korea's Kospi shed 6.2%, and Taiwan's benchmark was off 4.6%. The battering in Australia and New Zealand wasn't quite as severe, with key indices down 2.4% and 2.7% respectively.

Hong Kong's stock index tumbled 6.49% in early trade, with Lehman Brothers suspending trading of warrants.

The early bloodletting in Asia followed a bleak Monday for world stock markets, which were hard hit after a double-fisted blow from Wall Street -- news that Lehman Brothers had filed for bankruptcy and Merrill Lynch would be sold to Bank of America.

The Dow Jones industrial average fell more than 500 points in its largest point drop since after the September 11, 2001, terror attacks.

In Europe, the FTSE-100 share index closed down 3.9% in London, the Paris CAC-40 slipped 3.7% and Germany's DAX 30 index of blue chips sagged 2.7%.

Source: Thai National News Bureau Public Relations Department - 17 September 2008

Thanks. I get now sleep better, at least in the short term. (IMG:style_emoticons/default/huh.gif) (IMG:style_emoticons/default/huh.gif) (IMG:style_emoticons/default/huh.gif)