TASE market slides as Hong Kong, China shares retreat

TASE looks set for ninth straight day of losses, with Tel Aviv 25 down 2.5% at opening; China criticizes US, European "unsustainable" spending.

August 8, 2011 11:05
2 minute read.
Tel Aviv brokers

Tel Aviv brokers. (photo credit: REUTERS)

There was again major tension on the Tel Aviv Stock Exchange (TASE) Monday morning, as Hong Kong and China shares retreated for the second day on market pressures following Standard & Poor's downgrade of United States long-term credit rating on Friday.

On Sunday, the Tel Aviv 25 Index lost seven percent after the lowering of the US credit rating, sending panic throughout the global economy. The Tel Aviv 25 had lost 6.3% last week.

TASE plunges almost 7% due to US credit-rating downgrade
European stocks see biggest weekly fall since 2008

As feared, the TASE looked set for a ninth straight day of losses with the Tel Aviv 25 Index down a further 2.5% on the opening. But within the first half hour the losses moderated and at 9:30 a.m. the Tel Aviv 25 Index was down 0.9% to 1064.76 points.

Clal Finance chief investment manager Kobi Feller, striking an optimistic tone, said, "Panic on the markets will fade during the week and it is worth taking advantage of the sharp falls to buy shares."

Meanwhile, Chinese state-run media said Monday that the US must rethink its huge military outlays, big footprint abroad and summon the courage to defuse debt woes, reflecting the political pressures on Beijing with its big stash of dollar assets.

At the same time, Hong Kong and China shares retreated for a second-straight session, pressured by an acceleration of derisking from equity investments following Standard & Poor's downgrade of the long-term credit rating of the United States late on Friday.

Commentaries in official Chinese media said the economic troubles facing the United States and European Union grew out of the political dysfunctions of the Western democracies and their unsustainable appetite for spending.

The Xinhua news agency also linked the weekend US debt downgrade to another Chinese complaint: US military spending, which Beijing sees as aimed at frustrating China's rise.

"Since the collapse of the Soviet Union, the United States, as the world's sole superpower, has relied on its powerful military to meddle everywhere in international affairs, advancing hegemonism, and paying no heed to whether the economy can support this," said a commentary issued by Xinhua, which noted the heavy bills for wars in Iraq and Afghanistan.

Fears of a worsening crisis in Europe exacerbated the prevailing risk-off mood, plunging the Hang Seng Index and Shanghai Composite index to their lowest in more than a year as spooked investors propelled gold to a record on Monday.

The Hang Seng Index was down 4.04 percent at 20,100.2 by the midday trading break, its lowest level in a year. Turnover was almost 20 percent lower than on Friday, a sign that some investors were sticking to the sidelines.

The benchmark fell below chart support at its August 2010 low of 20,370 shortly after trading started, which analysts said accelerated selling. The next support is seen at the July 2010 low of 19,777.

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