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.

Tel Aviv brokers (photo credit: REUTERS)
Tel Aviv brokers
(photo credit: REUTERS)
There was again major tension on the Tel Aviv StockExchange (TASE) Monday morning, as Hong Kong and China shares retreatedfor the second day on market pressures following Standard & Poor's downgradeof United States long-term credit rating on Friday.

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

TASEplungesalmost 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 withthe Tel Aviv 25 Index down a further 2.5% on the opening. But withinthe first half hour the losses moderated and at 9:30 a.m. the Tel Aviv25 Index was down 0.9% to 1064.76 points.

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

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

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

Commentaries in official Chinese media said the economic troublesfacing the United States and European Union grew out of the politicaldysfunctions of the Western democracies and their unsustainableappetite for spending.

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

"Since the collapse of the Soviet Union, the United States, as theworld's sole superpower, has relied on its powerful military to meddleeverywhere in international affairs, advancing hegemonism, and payingno heed to whether the economy can support this," said a commentaryissued by Xinhua, which noted the heavy bills for wars in Iraq andAfghanistan.

Fears of a worsening crisis in Europe exacerbated the prevailingrisk-off mood, plunging the Hang Seng Index and Shanghai Compositeindex to their lowest in more than a year as spooked investorspropelled gold to a record on Monday.

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

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