By Shani Raja
Oct. 10 (Bloomberg) -- Australian stocks plunged, set for their worst week since the 1987 market crash, as a credit freeze deepened, worsening the outlook for the global economy.
Commonwealth Bank of Australia slumped 7 percent, while BHP Billiton Ltd., the world's largest mining company, plunged 7.8 percent to the lowest in 1 1/2 years.
``It's scary,'' said Prasad Patkar, who helps manage $1.8 billion at Platypus Asset Management in Sydney. ``Equity markets are pricing in a very severe, deep recession as a function of people not getting credit.''
Australia's S&P/ASX 200 Index slumped 313.50 points, or 7.3 percent, to 4,007.40 at 11:40 a.m., set for a 15 percent decline this week, the biggest rout in the index's history dating back to 1992. The All Ordinaries Index, which dates to 1979, is headed for its biggest weekly drop since the October 1987 market crash.
The Dow Jones Industrial Average in the U.S. yesterday dropped to below 9,000 for the first time since 2003, and the S&P 500 plunged 7.6 percent, on speculation carmakers, insurers and energy companies will be the next victims of the credit crisis.
``Investors are pricing in a reasonably significant and protracted recession,'' said Troy Angus, who helps manage $3.1 billion at Paradise Investment Management in Sydney. ``The market's anticipating corporate earnings in Australia to go down 20 percent at least.''
To contact the reporter on this story: Shani Raja in Sydney at sraja4@bloomberg.net.
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Friday, October 10, 2008
Australian Stocks Plunge, Set for Worst Week Since 1987 Crash
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