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Global Selloff Follows Wall Street Rout: Asia Hard Hit, Europe Less So

Worldwide stock slump hits media and tech shares as well

A global stock market selloff Tuesday wiped billions of dollars from corporate values, with media and tech stocks among those dented. The selling pressure meant that, in many major markets, gains registered in a buoyant January were wiped out.

Following a 4.6% drop in the Dow Jones industrial average Monday, the international selloff began Tuesday in the Asia-Pacific region, where all the main bourses except for South Korea’s suffered major losses of 3% to 5%. The main European exchanges all slid back as well, though to a lesser degree than in Asia.

Japan’s Nikkei 225 index shed 4.7%, closing at 21,610 points, and Australia’s ASX200 index plunged 3.2% to 5,883 points. In China, Hong Kong’s Hang Seng index closed down a brutal 5.1%, at 30,595 points, and the Shanghai exchange lost 3.4%.

In Britain, London’s FTSE index of 100 leading companies slumped by nearly 194 points to end the day with a loss of 2.64%, a less pronounced drop than witnessed the day before in the U.S. but hitting a one-year low at one point nonetheless. Commercial broadcaster ITV was down 2.6% while satcaster Sky, an acquisition target for 21st Century Fox, was more robust, down only 0.5%.

France’s CAC 40 closed 2.1% down to land at 5,181 points. Luc Besson’s EuropaCorp, already struggling with financial woes, dropped by 2.4%. Vivendi’s stock price dipped 1.4%.

Germany’s DAX shed 2.15%, with local media giant ProSiebenSat.1 sliding 2.75%. Another of Europe’s big-hitters, pan-European broadcaster and production group RTL, lost 2%.

Media and tech stocks in Asia fared badly, in line with or slightly worse than the local indexes as a whole. Chinese online giant Tencent fell 7% on Tuesday to HK$410 per share. State-backed distributor China Film Co. dropped 5.2% to RMB15.89, while private-sector players Huayi Bros. and Enlight Media tumbled by 6.6% and 4.3%, respectively. Japan’s leading film group Toho Co. was 4.8% lower at JPY3,465.

Only South Korean shares seemed able to defy the regional trend of heavy losses. The KOSPI index was down just 1.5% at 2,453 points. Leading Korean entertainment firm CJ E&M was off by only 0.44% to 89,500.

The trigger for the worldwide rout was last Friday’s U.S. payroll news, which came in higher than expected. That stoked fear of wage-driven inflation for the first time in nearly a decade.

For many market watchers, a correction had been expected after a long bull run. But the speed and scale of the pullback caught many by surprise. The fear now is that if markets do not stabilize quickly, more cautious assumptions about equities, bonds, currency and interest rates will set in. Increased risk-aversion by funds and other investors will then make it harder for companies to pull off IPOs, raise venture capital, or refinance existing borrowings.

Elsa Keslassy contributed to this report.

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