Asian investors jittery on US bailout failure

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Hong Kong, September 30:: Retail investors from Tokyo to Melbourne kept nervous vigil over their investments and some dumped shares on Tuesday following the shock rejection of the US bailout plan, which sent global equity markets tumbling.

In Australia, stocks fell more than five per cent in early trade as brokerages scrambled to deal with spooked investors looking to cut their losses given the bleak outlook.

"I've got an army helmet on my desk and I'm wearing it today, dodging the bullets," said Todd Kerslake, private client adviser at retail broker Shaw Stockbroking in Melbourne.

"We're getting a lot of calls from clients, there are some that are nervous and some that go with the flow."

But some traders noted that the scale of the losses and the mood of investors was nowhere near as dire as the stockmarket crash of 1987, which put global markets into a tailspin.

"This pales into insignificance by comparison," said Stuart Smith, senior private client adviser with Bell Potter Securities, who started as a trader in the 1970s.

In Japan, the Nikkei fell more than four per cent to a new low for the year, following a rout in the US, Latin American and European stock markets earlier, as investors sought refuge in cash and safer investments, such as gold and government bonds.

Japanese stocks recovered some of their losses, but were still down about three per cent in mid-afternoon trade.

SEEING RED, SEEING OPPORTUNITY

The Dow Jones Industrial Average posted its largest point decline ever, while the benchmark S&P 500 had its worst day since the 1987 crisis with an 8.8 per cent drop. Latin American stocks tumbled 13 per cent, their biggest decline in more than a decade.

Even before the vote by US lawmakers on the $700 billion bailout plan, Asian and European markets had fallen on fears the crisis was spreading, while US regional lender Wachovia became the latest big bank to succumb to the crisis.

In Korea, stocks initially fell sharply, but some brokers found solace in Asia's strong economic fundamentals and the likelihood that a revised rescue package would be put forward quickly.

"The impact on the domestic market would be limited compared to the US market," said Rommel Lee, retail research manager at Goodmorning Shinhan Securities in Seoul. Shares later recovered from earlier losses to be down about 1.2 per cent in the afternoon.