Nikkei falls 5 percent to 3-year low as Lehman failure bites
The benchmark Nikkei average slid 5 percent to a three-year low on Tuesday, with investors dumping shares across the board after Lehman Brothers’ collapse fuelled fears about the U.S. financial system and hit stock markets worldwide.
Japan’s top three lenders plunged, with No. 2 Mizuho Financial Group (8411.T: Quote, Profile, Research, Stock Buzz) and No. 3 Sumitomo Mitsui Financial Group (8316.T: Quote, Profile, Research, Stock Buzz) losing about 10 percent, their worst daily percentage drops in nearly five years.
Both the Nikkei and the broader Topix index, which dropped 5.1 percent, booked their biggest percentage falls in eight months.
After a holiday on Monday, investors in Tokyo came back to work to find Lehman Brothers (LEH.P: Quote, Profile, Research, Stock Buzz) had filed for bankruptcy and Bank of America (BAC.N: Quote, Profile, Research, Stock Buzz) had agreed to buy Merrill Lynch (MER.N: Quote, Profile, Research, Stock Buzz) in the biggest financial shake-up since the Great Depression easy quick payday loans.
“Investors are in shock for now as they had thought Lehman would be bought and rescued, but in fact it completely collapsed,” said Mitsushige Akino, chief fund manager at Ichiyoshi Investment Management.
“But we can assume the U.S. government sees some leeway in the situation, as it would have used public funds to help no matter what, had it decided that the failure of Lehman would completely batter the financial system.”
With Merrill already securing help, the focus has shifted to the health of American International Group (AIG.N: Quote, Profile, Research, Stock Buzz)
AIG, once the world’s biggest insurer, is also seriously constrained by short-term funding trouble.
Filed under: money by Fred