Tokyo, Hong Kong Markets Open With Dramatic Plunges

The turbulence that shook the world’s stock exchanges last week continued today as prices dropped sharply on the Tokyo and Hong Kong markets.

The Tokyo Stock Exchange careened downward again today at a frantic pace. The 225-share Nikkei stock average, was down 1,414.47 points to 21,884.31 in afternoon trading.

The decline was second only to last Tuesday’s drop of more than 3,836 points, which followed a 508-point drop in the Dow Jones industrial average.

Ginger Tulley, a stock market analyst, said the plunge resulted from “some indication of less confidence in the dollar.”

But she said there also was “general fear and uncertainty, particularly over what’s going to happen in Hong Kong.”

Those fears were realized when prices on the Hong Kong Stock Exchange opened sharply lower in active trading today after a four-day suspension. Officials had hoped the hiatus would calm anxieties over market declines overseas.

The Hang Seng index, the main market indicator, lost more than 25% of its value, before stabilizing at 2,512.87--a staggering loss of 849.52 points .

“It’s a crucifixion,” said Tony Measor of Dao Heng fund managers.

Turnover was more than $128 million in the first hour of trading.

The October index futures contract slid to 2,000--a loss of 40%--before rebounding on light buying interest, brokers said.

U.S. investors were looking to the Far East for the first indications of how the world’s markets would fare following last week’s volatility. Exchanges around the world formed a cyclical relationship last week, with foreign markets affecting and being affected by the activity in New York.

For example, on Tuesday, the Nikkei index fell a record 3,836.48 points after last Monday’s plunge in the Dow average. The Tokyo market rebounded Wednesday, posting a record single-day gain of 2,037.32 points, followed by a 457.05-point gain Thursday. It then lost 1,203.23 points Friday and gained 97.56 points Saturday.

The dollar lost 2.55 yen in opening trading today, to 141.60 from 144.15 on Friday. During last week’s stock price gyrations, currency markets had remained relatively stable. Dealers said today they worried that the sudden fall in the dollar suggested the stock market troubles are now being felt in other markets such as currency exchanges.

“There now is concern about how the exchange rate movement will affect the stock market,” said Nobuyuki Ueda, a senior economist for the Japan Long-Term Credit Bank Ltd.

In New York Sunday, Wall Street prepared for the new week by clearing out the debris left by last week’s turbulence. New York Stock Exchange employees and brokers continued to work on eliminating the backlog of paper work from last Monday and Tuesday, when more than 1.2 billion shares were traded.

Richard Torrenzano, a spokesman for the NYSE, said about a half to a third of the exchange’s 2,000 employees--who already had spent an unusual Saturday on the job--worked from 10 a.m. until the mid-afternoon to wrap up questioned trades. Those are transactions in which there were disputes about the number of shares or the price of a stock.

“They’re making sure that the trades match up, that you buy what you thought you bought and sell what you thought you sold,” Torrenzano said.

The weekend overtime was necessary because today is settlement day for transactions that took place last Monday. Trades are settled--with money paid and securities delivered--five trading days after the transactions are made.

With the backlog out of the way, the exchanges would be ready for this week’s trading and brokerage firms would have a better idea of how they fared during the week that saw the Dow average drop 508 points in one day and then recover some ground to close out the week with a loss of 295.98 points at 1,950.76.

The NYSE, American Stock Exchange, over-the-counter market and other exchanges closed two hours early Friday and will do so again today and Tuesday to give the system more time to catch up. The stock exchanges are closing at 11 a.m. PST