The turmoil in Hong Kong is taking no hostages, with some of the biggest companies having millions of dollars wiped off the value of their shares. HSBC Holdings, the biggest company on the exchange, saw HK$13 knocked off its price, a one-day fall of 6 per cent.
When traders got to their desks yesterday they noted a decline in the volume of business and looked set for no more than a modest fall in the Hang Seng Index. At the morning close it was down just 141 points.
However, in the last half hour of trading, the market burst to life with big overseas institutional investors pouring in sell orders. Most came from Europe where fund managers appeared to be taking a negative view of East Asian markets.
The Hang Seng Index has shed 2,173 points in the past six days of trading, registering one of the biggest periods of decline in the Hong Kong exchange's history. "Our market doesn't have a problem," said Sir Donald Tsang, the territory's Financial Secretary, who is trying to talk up prices.
Until yesterday he only needed to talk up the blue chips, as non-blue chip stocks had been in only modest decline compared with the Hang Seng Index constituents. This changed sharply with a sudden plunge of more than 10 per cent in the value of H-shares, the shares controlled by Chinese state corporations. Howard Georges, the managing director of South China Brokerage, said investors in China-associated stocks had become "a bit panicky" as they saw other parts of the market slump and started to offload their shares in a rush.
"Hong Kong tends to do things very sharply and savagely", Mr Georges said. He was not sure when a rebound could be expected but insisted that "Hong Kong fundamentals are really pretty OK".
Brokers' analysts cited fears over the local currency and rises in interest rates as reasons for the sell-off but it seemed more likely that herd mentality had gripped the market, causing a stampede into cash.
Meanwhile, the Hong Kong dollar came under renewed selling pressure but, as ever, aggressive market intervention by the Hong Kong Monetary Authority held the local currency close to its fixed link with the US dollar.
In Indonesia the authorities tried to curb the forward selling of the local currency as a means of shoring up its value but the rupiah continued to slide alongside share prices.
The Singapore dollar, which became entangled in the Asia-wide currency decline, despite its underlying strength, is showing signs of recovery but it was not enough to enthuse investors, who knocked another 1 per cent off the value of shares yesterday.
The Japanese market, which had remained aloof from the turmoil elsewhere in Asia, saw the blue-chip Nikkei 225 slide by 255 points, a loss of slightly more than 1 per cent.
In Bangkok, where share prices fell more than 10 per cent last week on top of a similar fall the week before, investors were treading water as the coalition government announced it had applied for another $25m to boost the World Bank's rescue package to $17.5bn.
Now that East Asian shares and currencies have lost their lustre it will be difficult to lure big fund managers back into these markets. A few weeks ago they were prepared to pay high prices for the shares they are off-loading like a bad smell. Their anxiety to off-load is intensifying as the East Asian markets become illiquid. This leaves the managers turning to the most liquid of the markets, notably Hong Kong, where large positions are being liquidated, regardless of their underlying value.