Wagoner's Ouster Causes Asian Stock Crash

Bertel Schmitt
by Bertel Schmitt
wagoner s ouster causes asian stock crash

On hearing that Rick Wagoner is outta here, Asia-Pacific shares nosedived on Monday, which wiped out most of the gains they had made last week. It’s not that anyone is missing Red Ink Rick. Traders at the Asian exchanges see the departure as a sign that “the US government might allow one of the world’s biggest car makers, General Motors, to go bust,” writes the Financial Times [sub].

As Wagoner’s defenestration hit the wires, the Nikkei in Japan dropped 4.5 percent to record its worst day for two and a half months. Hong Kong’s Hang Seng lost 4.7 percent—its biggest fall in three weeks. Taiwan shares were down 3.4 percent and in South Korea the market dropped 3.2 percent.

A person close to General Motors told the Financial Times said that the resignation of Rick Wagoner at the weekend made it likely the company would file for bankruptcy protection sometime in the next few weeks.

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  • Pch101 Pch101 on Mar 30, 2009
    A single percentage point decline is hardly a “crash”, and it proves absolutely nothing about the effect of GM on the world’s businesses as a whole. The Nikkei fell 4.5% yesterday, not 1%. It was generally a down day, but the losses really accelerated once the announcement was made. The linkage to the GM news is clear here, although a correction from the earlier rally is likely to be an additional factor. It fell because its a bear market. For one, the bear market characterization has become debatable. For another, markets respond strongly to news. Chapter 11 is not good for stock values, so speculation that GM could file bankruptcy is naturally going to cause this response. Investors don't like it so much when the value of one of their holdings goes to zero.

  • Bertel Schmitt Bertel Schmitt on Mar 30, 2009

    SINGAPORE (Dow Jones)--Asian markets tumbled Monday as risk-averse investors dumped equities on reports the Obama administration has forced the departure of General Motors Corp.'s chief executive and suggested a "quick and surgical" bankruptcy for struggling U.S. car makers.

  • 50merc 50merc on Mar 30, 2009

    "the US government might allow one of the world’s biggest car makers, General Motors, to go bust" That should read, "the US government might publicly admit that one of the world's biggest car makers, General Motors, has gone broke."

  • SexCpotatoes SexCpotatoes on Mar 30, 2009

    Yah, I agree with don1967, what we really need is a triple-digit percentage decline, then we can call it a crash. /sarcasm