Source Forbes

With famed speculator George Soros saying that the world is facing the worst financial crisis since World War II, it's no wonder that ordinary investors are worried.

Panic selling intensified across Asia on Tuesday, with the benchmark indexes in Tokyo, Hong Kong, Seoul and Sydney slumping 4% to 8%.

Hong Kong stocks were the hardest hit in the wake of fresh worries that the U.S. is slipping into a recession, threatening the earnings of Asian exporters. The Hang Seng Index broke through a key support level, its 250-day moving average, plunging over 8%, or 1,914.73, to 21,904.13 at midday. Investors continued to unload banking stocks to avoid further losses caused by possible write-downs on investments in U.S. mortgages.

Industrial And Commercial Bank Of China plunged 11.11%, or 54 Hong Kong cents (6.9 cents), to 4.32 Hong Kong dollars (55 cents). Bank of China's H shares swooned another 8.6%, or 29 Hong Kong cents (3.7 cents), to 3.08 Hong Kong dollars (39 cents), following a 6% drop Monday on a newspaper report that the country’s second-largest lender could announce a net loss for 2007 as a result of huge write-downs on U.S. subprime-related investments. Trading in Bank of China’s A shares in Shanghai were suspended this morning, pending an announcement. HSBC Holdings slid 6.3%, or 7.20 Hong Kong dollars (92 cents), to 106.40 Hong Kong dollars ($13.64), a record low since October 2003.

BNP Paribas believes the Hang Seng may not find fundamental support until it drops back to August 2007 levels--around 20,000 points, about 10% below Tuesday’s midday close. “Global economic fundamentals have deteriorated since August 2007, so it is possible to see even lower levels," the bank said in a research note Tuesday.

“Until the round trip back to August 2007 levels is complete … there's not much point trying to 'bottom fish' in the market,” it said. BNP Paribus named China Cosco, China Communication Bank and Sinopec among its top shorts.

On the mainland, yuan-denominated A shares plummeted, mainly due to negative foreign sentiment and plans for a $22 billion issuance of new shares and bonds by Ping An Insurance. The Shanghai Composite Index ended the morning down 4.1%, or 200.13 points, to 4,714.30, while the benchmark Shenzhen Composite Index dove 4.1%, or 59.63 points, to 1,388.55.

In Japan, the benchmark Nikkei 225 plunged to a 28-month low, closing down 5.65%, or 752.89 points, to 12,573.05. Banking giant Mizuho Financial Group lurching 8.2% lower, or 38,000 yen ($358.45), to 426,000 yen ($4,018.10).

"It's like a funeral in here," said Ken Masuda, senior equities dealer at Shinko Securities in Tokyo. "No one knows what's going to happen tonight in New York. It's like we've gone blind, you don't know what's coming.

"Until we see New York, all we can do is sell," he said.

As investors reduced exposure to risky high-yield assets and the Japanese government signaled it would not intervene in the currency and share markets, the yen remained near a two-and-a-half-year high against the U.S. greenback at 106.17. The strong yen and fears of slowing sales in the U.S. led investors to sell off shares of exporters.

Toyota Motor dropped 7.2%, or 380 yen ($3.59), to 4,880 yen ($46.08). Sony fell 6.9% to 5,110 yen ($48.25).

"I'm sure we're in a bear market, because the mood is very negative. People no longer believe that stocks are the road to riches," said Cannae Capital Partners managing director Hugh Giddy. "This may be a long slow grind down because earnings expectations will start to fall."

In Sydney, the benchmark index slid 7.3%, or 408.90 points, to 5,222.00, Tuesday afternoon, marking the biggest one-day drop in more than a decade.

It's just not asia, sell off is occurring in North American markets too. TSE just lost all gains over the last year and Nasdaq and NYSE is following suit.

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