Asian stocks tumbled today, Thursday, heading for their biggest daily fall since the attacks on the United States in September 2001, as persistent fears about a global credit squeeze sapped investor appetite for risky assets. The latest scare was set off by worries that Countrywide Financial, the largest U.S. mortgage lender, could face bankruptcy if liquidity worsens after a Merrill Lynch (NYSE: MER, stock) analyst issued the Red-Alert.

If you’re superstitious, it’s time for you to blame it on the Chinese Hungry Ghosts festival which coincided with the worst accident in history – all signs point to Putrajaya. Only this time, the hungry ghosts might be from the elite investors or speculators who are out to create havocs in the global stock markets. Be scared, be very very scared.

It was reported that Australia added a larger-than-usual amount of $2.5 billion in cash to the banking system, while South Korea said it would take all possible measures to stabilize domestic financial markets. Central banks in Indonesia, Malaysia and the Philippines were also reported to have intervened to support their currencies for a second straight session.

MSCI’s (Morgan Stanley Composite Index) measure of Asia Pacific stocks excluding Japan fell 5 percent to four-month lows. The MSCI index is down more than 16 percent from the July 24 record high, but is still up about 6 percent for the year. Japan’s Nikkei and Australia’s S&P/ASX 200 index have both wiped out gains for this year.

Almost all the investors are dumping financial stocks after the housing stocks were beaten to their low recently. So you should know what stocks to avoid temporarily. Nobody knows when this falling knife will reach the gound. If you wish to play safe, wait for the knife to reach the ground, or at least wait for it to lose its momentum. If you wish to take some risks, then you might want to buy in stages.

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August 16th, 2007 by financetwitter

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