Yahoo!  My Yahoo!  Mail
				News Home - Help

News Home Top Stories World Asia Pacific Business Technology Entertainment Sports Photos -- News by Country -- Indonesia Malaysia Philippines Singapore Thailand -- Greater Asia -- China Hong Kong Taiwan
	Yahoo! Asia News Search Yahoo! News

		advertisement
Monday August 6, 4:54 PM Asia financial stocks slide on credit squeeze HONG KONG, Aug 6 (Reuters) - Financial stocks skidded across Asia on Monday as investors, worried that further fallout looms from the global credit squeeze, dumped shares in Australia's Macquarie Bank and Singapore's lenders, among others. A growing number of Asian financial firms has revealed exposure to investments related to the U.S. subprime mortgage meltdown, mostly through holdings of structured products, with more disclosures expected. While analysts have said that Asia's exposure should be small and manageable, investors are in an unforgiving mood and are expected to remain so until a clearer picture emerges. Winson Fong, head of greater China equities with Societe Generale Asset Management in Hong Kong, said he expects more small and mid-sized financial firms to reveal the extent of their holdings in instruments exposed to the subprime crisis. "The size may be bigger than what we expect, so there may be some more de-rating on the sector. And I think it's just the beginning, so I don't think we'll see a sharp rebound anytime soon," said Fong, whose firm manages $2.5 billion in Asian stocks. "This is really a black hole." Shares in Macquarie, Australia's biggest investment bank, fell as much as 7.6 percent before ending 6.6 percent lower. The firm, which last week rattled markets when it said retail investors in two of its funds face losses of up to 25 percent, has lost 29 percent of its market value since a May record high. DBS Group Holdings and United Overseas Bank both fell 6 percent on Monday after Singapore's central bank on Friday told financial firms to take account of their exposure to collateralised debt obligations (CDOs). Rival Oversea-Chinese Banking Corp. was 5.17 percent lower after saying on Monday that it did not expect any big impact from its $430 million in CDO holdings. Monday's sell-off pushed the MSCI index of Asia-Pacific financial stocks down by 1.86 percent. The index is now 8 percent below an all-time high reached on July 24. It followed another slide on Wall Street on Friday, when Standard & Poor's cut its rating on the debt outlook for Bear Stearns Cos. and the U.S. investment bank halted share buybacks to help it weather the credit storm. SOURED MARKET Japanese banks fell nearly 3.7 percent before ending 1.83 percent lower. Mizuho Financial and Mitsubishi UFJ Financial Group Inc. both ended 2.5 percent lower, while top brokerage Nomura Holdings closed 3.2 percent lower. "I think a lot of this has to do with Mizuho's earnings, which kind of soured the market," said Ken Masuda, senior dealer in equities at Shinko Securities, referring to the No. 2 Japanese bank's decline in quarterly profit reported last week. "There are worries about the U.S. subprime market. But I don't think there will be much of an impact here. Japanese banks aren't really exposed to that market," he said. ICICI Bank , India's largest private lender, was nearly 3.5 percent lower on fears that India's housing boom could be cooled by the U.S. mortgage crisis. Shin Kong Financial , which runs Taiwan's No. 2 life insurer, ended down 3 percent after it said on Friday that about one-third of its T$10.53 billion (US$320 million) in asset-backed securities holdings were related to U.S. subprime products. Taiwan Life Insurance also lost 3 percent. "Taiwan insurers will be hurt by their exposure to the U.S. subprime market, prompting investors to dump financial stocks," said Chris Wang, who manages $82 million for Paradigm Asset Management and does not own any financial shares. SELLOFF OVERDONE? Citigroup banking analyst Tracy Yu said on Monday that the sell-off in Asian financial stocks was overdone. The impact of U.S. subprime mortgage problems and falling prices of structured products should be manageable for Asian firms, "unless there is a broader re-pricing of CDO risk and credit spreads that results in a significant loss for even the highest grade investments," she wrote. Still, financial shares dragged markets lower across Asia. China Life Insurance , the country's biggest insurer, ended down 4.35 percent in Hong Kong, while Bank of China and China Construction Bank both closed nearly 4 percent lower. South Korean banking stocks have fallen 14 percent since hitting a decade high on July 24, including a nearly 2 percent drop on Tuesday. Top lender Kookmin Bank ended 2.25 percent lower, while brokerage Daewoo Securities Co. lost 2 percent. In Australia, other financial stocks followed Macquarie lower, with Babcock & Brown down 4.1 percent, Allco Finance Group Ltd. off by 5 percent and Challenger Financial Services Group Ltd. 5.75 percent lower. Investors fear the worst may not be over. "It's the uncertainty of how it's all going to unfold in the future, and what that actually means for the ongoing earnings, is the main issue for investors," said Tony Russell, a senior equities adviser with ABN AMRO Morgans in Brisbane. (US$=T$32.886) (Additional reporting by Denny Thomas in Sydney, Jeffrey Hodgson in Hong Kong, Faith Hung in Taipei, Rafael Nam and Kim Yeonhee in Seoul and Eriko Amaha and David Dolan in Tokyo)