Slump in Asia markets prompts talk of global slowdown
17 August 2007
Asian stocks slumped on Thursday in response to another fall in the US markets as mortgage lender Countrywide Financial and a fund linked with buyout firm Kohlberg Kravis Roberts & Co were hit by credit concerns tied to the subprime mortgage crisis. Hong Kong's Hang Seng Index fell 3.3% while Japan's Nikkei 225 and Korea's Kospi Composite dropped 2% and 6.9% respectively, the Wall Street Journal reported. The Shanghai Composite Index lost 2.14%. Jim O'Neill, head of global economic research at Goldman Sachs, said it was time to start asking if what began as a meltdown in one part of the US bond market was going to affect global growth. The IMF forecast three weeks ago that a slowdown in US growth would be balanced out by strong gains in China and India. Although there is likely to be a fall in US imports from China, O'Neill and other economists remained confident that the country - recently buoyed by its strongest retail sales figures in three years - would continue to spend.
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