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Plunging stocks in Asia add to political turmoil

From a teetering government in Thailand to a struggling economy in Japan, havoc on the world's stock markets is hitting many Asian countries at a vulnerable time.

In Europe or the United States, a market drop is unlikely to result in big political or social repercussions. But in parts of Asia exhausted by months of market slumps, another hard hit only adds to a turmoil already shaking governments and big corporations.

Just last week, investors demonstrated in Taipei, threatening to sue Taiwan President Lee Teng Hui. They said they trusted him last month when he promised that the local stock plunge had bottomed out _ that was before they racked up more huge losses.

On Tuesday, computer salesman Chuang Sheng Wen looked up at new losses in the flashing green numbers on an electronic billboard in a trading room in Taipei. Asked if he was upset, he said: "What's the use? Didn't our officials just tell us that if you don't sell your stocks, you don't suffer any losses?"

In Seoul, the stock market mayhem sweeping Asia, Europe and the Americas began after debts already had sunk or brought to the brink of bankruptcy more than a half-dozen South Korean conglomerates in the past year. The state of the South Korean economy and corruption scandals are the focus of the campaign leading up to December's presidential election.

"It's all the government's fault," said Baek Chun Hum, a computer programer with 10 years of experience in the stock market. "If the ruling party didn't have all the internal disputes, things wouldn't have gotten so bad."

In Thailand, where a currency crisis that began in July set off an economic meltdown that battered Southeast Asia's other "tiger" economies, Chavalit Yongchaiyudh became a lame-duck prime minister last week in the face of public demands for his resignation.

In the last year, half of Thailand's financial institutions have closed because of bad loans, and some 100,000 jobs have evaporated.

The $17.2-billion credit line that the International Monetary Fund arranged for Thailand in August could be jeopardized by economic turmoil in countries that have pledged funds, such as Japan, Australia, South Korea and Indonesia.

For Tokyo, this week's worldwide stock tumble was the latest in a series of difficulties spanning the 1990s, known here as the "burst of the bubble economy."

The bubble was characterized by excessive lending and speculative real-estate investments. Since then, land prices and stock prices have plummeted, leaving Japan's economy in the doldrums and its major banks with huge bad debts.

On the Tokyo Stock Exchange, the latest slide presents a problem for the government, which must come up with a new formula for growth to replace the old-style government-driven exports abroad and construction projects at home. Neither is proving effective anymore.

A scandal over major Japanese companies' payoffs to mobsters, some as compensation for stock market losses, also has the public disenchanted with government and big business.

"This ongoing slump makes me wonder whether the Japanese market is headed toward collapse," said Gakuji Hasegawa, a 39-year-old life insurance worker in Tokyo.

The news got a little better this morning as Asia's battered stock markets welcomed Wall Street's recovery with a rally of their own, capped off by Hong Kong's 17 percent advance in early trading.

Stock exchanges from Australia to Tokyo posted gains of up to 5 percent and higher.

"We are going in tandem with the Dow's gains, but I'm not convinced that we will sustain this rate," said a dealer at a brokerage house in Malaysia.

_ Information from Reuters was used in this report.

The world reacts

Spooked by American stocks' plunge Monday, overseas markets fell dramatically Tuesday with Hong Kong's posting its largest sell-off since 1989. As U.S. stocks began to rally later Tuesday, markets in London and Paris rebounded from morning lows, and Toronto even posted a moderate gain. Shown are the percentages of market value lost or gained, with Oct. 1, 1997 being assigned a value of 100.

Sources: Associated Press, Wall Street Journal