ANYONE fearing Asian markets were in for a severe drubbing yesterday after bad United States jobs data and Wall Street's sharp losses last Friday were wide of the mark.

True, an initial knee-jerk selldown across the region did cause the benchmark Straits Times Index (STI) here to plunge by nearly 100 points at the opening bell.

But as the day unfolded, the considerable resilience displayed by Hong Kong and Shanghai bourses, when they opened for trading, helped cushion the falls of Singapore and other regional markets.

This encouraged investors to return to take up fresh positions.

And it also paved the way for Asian markets, other than Tokyo and Seoul, to recover significantly from their opening losses.

Still, despite the nonchalance displayed by Asian markets to the wild swings felt on Wall Street and European bourses, most analysts expect Asia to continue to suffer from any knock-on effect related to fears of a weakening of the US economy, as the mortgage crisis there widens.

At the close yesterday, STI was down 47.1 points at 3,441.87, after halving its initial loss, its first day of losses in four. Hong Kong's Hang Seng Index closed a shade higher and China's Shanghai Composite Index rose 1.48 per cent. Late recoveries were also made by the Kuala Lumpur Composite Index, down 1.09 per cent and Indonesia's Jakarta Composite Index, off 1.35 per cent.

Market sentiment was spooked by fears that the Dow Jones Industrial Average's 250-point plunge last Friday, following the worse-than-expected US job data, would cause foreign funds to lighten up on their Asian holdings, as they responded to redemption calls back home.

But most dealers noted that the absence of strong selling pressure on blue chips means that overseas funds are largely staying put for now. Data from Citigroup yesterday suggests these funds have poured about US$2.9 billion (S$4.4 billion) into Asian equities in the past two weeks, after pulling out about US$2.6 billion a week before that.

In Singapore, top falls were banks such as DBS Group Holdings. which fell 40 cents to $19.90. and United Overseas Bank. which lost 30 cents to $21.10, given investor concerns on the impact of a global credit squeeze on financial institutions.

Other losers were shipping lines such as Neptune Orient Lines, which lost 45 cents to $5.65, and STX Pan Ocean, which fell 11 cents to $2.84, on concerns which a possible slowdown in the US economy will have on Asia-Pacific shipments.

Deutsche Bank Private Wealth Management chief Asian strategist Marshall Gittler warned that concerns are 'unlikely to be fixed immediately', even if the US Federal Reserve cuts interest rates by 0.25 percentage point when it meets next Tuesday.

engyeow@sph.com.sg