KEY POINTS:
The credit-market paralysis that set in last week as US politicians bickered over their US$700 billion ($1.05 trillion) Wall St bailout plan continued to plague equity markets in the Asia Pacific region when they opened for business yesterday.
Although the US bailout plan became law on Friday, the international fallout from the crisis continued unabated with Governments across Europe rushing to prop up failing banks over the weekend.
On Sunday, Germany said it would follow Ireland and Greece in guaranteeing all private bank accounts.
With the pricing of US stock index futures suggesting another day of losses for Wall St after the weekend, New Zealand's benchmark NZX-50 index fell heavily on opening yesterday and over the session flirted with the 2 1/2 year low of 3040 it hit in July.
It closed 103 points or 3.38 per cent lower at 3048.38. Australia's ASX-200 fell by a similar margin, closing 3.3 per cent lower at 4540.4 - its lowest level in almost three years. In Japan, the Nikkei tumbled 4.3 per cent to its lowest level in 4 1/2 years as shares were dumped across the board.
Hong Kong's Hang Seng was down 5 per cent. Britain's FTSE 100 was down 4.62 per cent in early trading last night, following a slide in Asian markets.
Although the New Zealand index's losses were steep, turnover once again was relatively light.
"It's transactionally very quiet, most people are just doing nothing," said Matt Willis of ABN Amro Craigs.
"Most private clients are passive long-term holders these days. You get your asset allocation right and hope that you work your way through the cycles okay."
Nevertheless, Willis said it wasn't much fun watching asset values fall out of bed by the day.
Top stock Telecom was down 10c or 3.46 per cent to $2.79 while second largest listing, Contact Energy, fell 21c or 2.76 per cent to $7.40.
Willis said in current conditions, with credit markets having practically ceased functioning for several days, market fundamentals meant little.
"The critical thing is faith needs to be restored to the credit market. Until that happens equity markets will not be able to function as they should.
"They won't be a reflection of forward earnings forecasts, because while there is a perception of systemic risk fundamentals will be completely overshadowed.
"You can't confidently forecast what corporate earnings are going to look like in a year without having some confidence the credit markets are going to be working okay."
The sharemarket may also have been weighed down yesterday by Treasury's gloomy pre-election report on the state of the economy.
From US66.22c at 5pm on Friday, the kiwi closed at US65.15c last night.
