DSME Daewoo shipbuilding stock chart

Image courtesy Reuters

HONG KONG (MarketWatch)–The South Korean market led the way for hefty stock losses in Asia Friday, as risk appetite evaporated on a fresh wave of concerns about global growth, with shipbuilders, exporters and financials among the hardest hit.

South Korea’s Kospi sank 6.2% to 1,744.88 for its worst one-day percentage loss since its 6.7% plunge on Nov. 20, 2008, with program trading briefly suspended in a bid to arrest the declines. The performance gave the index a net loss of 18.2% in August, by far the worst performance among major regional indexes.

Several stocks in the shipbuilding, refining and petrochemicals and automobile sectors tumbled by more than 10%, including Daewoo Shipbuilding & Marine Engineering, Korea Kumho Petrochemical and Hyundai Motor.

“Fear is the word. There’s no confidence in anything,” said Tom Kaan, director of equity sales at Louis Capital Markets in Hong Kong.

“It’s a situation of catching the falling knife, and unfortunately the knife is very sharp,” Kaan said.

Hong Kong’s Hang Seng Index fell 3.1%, Japan’s Nikkei Stock Average lost 2.5% and Australia’s S&P/ASX 200 index dropped 3.5%.

Taiwan’s Taiex sank 3.6%, while China’s Shanghai Composite was among the region’s best performers, dropping a relatively modest 1.0%.

Asia’s losses mirrored a sharp selloff in the U.S. on Thursday where fears about the health of the economy were heightened after factory activity in the Philadelphia region weakened to the lowest level in more than two years.

Deutsche Bank downgraded its China growth outlook Friday, saying the slowdown and even the potential for recession in Europe and the U.S. now outweighed domestic credit tightening as the biggest risk to China’s economy. The call came on the heels of a downgrade to global growth forecasts by Morgan Stanley Thursday.

“China needs people to buy their goods before they can grow. If the rest of the world slows down, China will slow down,” Kaan said.

In Tokyo, there was no respite for exporters from worries over a firm yen, with a dollar buying Y76.38. Nissan Motor slid 4.4% and Sony fell 3.2%.

“With a weak outlook and a strong yen, export growth will probably be soft for some time to come,” Capital Economics said. “In the short term, the strength of the yen will be a further barrier to export-led expansion.”

Heavy-equipment maker Sumitomo Heavy Industries skidded 5.4% and shipping firm Kawasaki Kisen Kaisha tumbled 4.3%.

Energy and other resource stocks also suffered big losses on worries global demand for commodities would suffer. Woodside Petroleum shed 3.9% in Sydney, PetroChina lost 4.1% in Hong Kong and Inpex dropped 4.7% in Tokyo, as Nymex crude-oil futures extended their overnight plunge during Asian hours.

Among other resource stocks, Rio Tinto sank 5.3% in Sydney, while Aluminum Corp. of China fell 8% in Hong Kong and 1.4% in Shanghai.

Financial stocks tracked weakness in the U.S. and Europe, with Nomura Holdings down 3.7% in Tokyo. Heavyweight HSBC Holdings PLC fell 4.2% in Hong Kong and Cathay Financial Holding shed 4.5% in Taipei.

Bank of Communications declined 5.4% in Hong Kong and 1.3% in Shanghai. The lender kicked off interim earnings for the large Chinese lenders with a profit growth above expectations, but disappointed by not paying an interim dividend.

In Sydney trading, Australia & New Zealand Banking Group sank 4.5%, after it delivered a trading update which showed mild rise in third-quarter profit and a 39% drop in trading income.

Billabong International plunged 26.1% after the surfwear retailer, which is heavily exposed to currency fluctuations, posted an 18% fall in full-year profit and withdrew guidance.

Some consumer and telecom stocks offered a rare bright spot, as investors sought out defensive sectors. Hite Brewery jumped 6.2% in Seoul and China Mobile added 0.9% in Hong Kong.

- By Virginia Harrison in Sydney, and V. Phani Kumar in Hong Kong, Dow Jones Newswires

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