Shades of post-Lehman crisis in Asian market turmoil

Asian markets on Tuesday endured one of their most volatile days since the height of global financial crisis three years ago as margin calls forced traders to dump risky assets before bargain hunters and state investors swooped in to stem hefty losses.

Sparked by a 6.7 percent fall in the S&P 500 Index .SPX overnight and signs that global growth was sputtering, Asia stocks tanked at the open and quickly spiraled lower on indiscriminate selling.

South Korea's KOSPI .KS11 slumped close to 10 percent at one stage, its biggest slide in two years.

Some Asian mutual funds were also seen dumping shares on expectations that investors will pull out what's left of their money in an effort to preserve capital.

The rout spilled into foreign exchange, commodity and money markets, at one stage thumping the Australian dollar down as much as 3 cents versus the U.S. dollar and pushing it below parity for the first time in five months.

Japanese foreign exchange margin traders took a bath as stop loss orders hit cross rates include the Aussie/yen and South African rand/yen.


VOLATILITY RATTLES


Australia's S&P/ASX 200 index .AXJO, already down 11 percent over the past week, fell as much as 5.5 percent during the session before rebounding to close more than 1 percent higher.

In China, where the Shanghai Composite .SSEC ended flat after falling as much as 3.5 percent on top of a 3.8 percent fall on Monday.

Hong Kong stocks .HSI suffered their worst one-day loss, 5.7 percent, since the 2008 crisis. The moves in Hong Kong and South Korea came as stock futures saw record volume.

Not all market participants were fazed by the volatility. In Tokyo, which has endured a succession of natural and financial disasters, traders were more sanguine. (Reuters)