Most Asian Stock Markets Decline, Led by Banks; Hong Kong Jumps
28 Oct 2008Oct. 28 (Bloomberg) -- Most Asian stock markets fell after Mitsubishi UFJ Financial Group Inc. said it will sell new shares to replenish capital and Compal Electronics Inc. slashed its shipment growth forecast.
Mitsubishi UFJ, Japan's biggest bank, dropped 6.4 percent after saying it plans to raise as much as 990 billion yen ($10.7 billion). Lower profit sent China Life Insurance Co. down 7 percent in Shanghai. Compal, the world's second-largest maker of notebook computers dropped 6.9 percent in Taipei. HSBC Holdings Plc jumped 7.1 percent in Hong Kong, helping the Hang Seng Index rally from its biggest drop since 1997.
Markets fell across the region, except for Japan, Hong Kong, South Korea and Thailand. The MSCI Asia Pacific Index gained 0.7 percent to 75.71 as of 1:23 p.m. in Tokyo, erasing losses of as much as 2.8 percent. The measure slumped 19 percent in the previous four days.
``Eventually the sun will shine and some investors will be smiling again,'' said Edwin Merner, president of Atlantis Investment Research Corp. in Tokyo, whose parent company manages about $3.1 billion. ``Panic also means opportunities.''
The index has lost 53 percent this year on concern the widening financial crisis and slowing economic growth will hurt company profits. The measure now trades at less than 1 times book value, compared with the Standard & Poor's 500 Index's 1.6 times.
Benchmark indexes in Singapore, Malaysia and New Zealand were among the region's biggest decliners today, following a holiday in those markets yesterday, when MSCI's Asian index lost 6.5 percent.
``While we are starting to see value emerge, the panic selling could entail further risks on the downside,'' said Nicole Sze, a Singapore-based investment analyst at Bank Julius Baer & Co., which manages $350 billion.
Japan, Hong Kong
Japan's Nikkei 225 Stock Average gained 2.6 percent, erasing a 2.4 percent decline. Finance Minister Shoichi Nakagawa said restrictions on short-selling of shares will take effect today to bolster the stock market.
Hong Kong's Hang Seng Index gained 5.2 percent, snapping a five-day, 28 percent plunge, after Financial Secretary John Tsang said the government will act to support the stock market if necessary. HSBC rose the most in five weeks. Queensland Gas Co. jumped, limiting declines in Australia, after BG Group Plc agreed to buy the rest of the company.
S&P futures rose 1.2 percent today. The S&P 500 extended its worst monthly decline since 1931 yesterday, as General Motors Corp. sank after Moody's Investors Service cut the largest U.S. carmaker's debt rating and a drop in oil prices dragged down energy companies.
Leading declines in Asia, Mitsubishi UFJ lost 6.4 percent to 546 yen. The bank may sell as much as 600 billion yen of common shares and a further 390 billion yen of preferred shares to investors it didn't identify.
Value Concerns
The shares dropped on concern new equity sales will dilute the value of existing stock, already ravaged by slowing demand for loans in the world's second-biggest economy.
Mizuho Financial Group Inc., Japan's third-biggest publicly traded bank, plunged 8 percent to 211,900 yen. Sumitomo Mitsui Financial Group Inc., the second-largest, dropped 13 percent to 335,000 yen.
The declines helped drive a measure of Asian financial shares down 3.6 percent, the biggest drop among 10 industry groups. The index has plummeted 38 percent this month as credit markets seized up and losses and writedowns by bankers and brokers worldwide reached more than $670 billion.
Funding Costs
Asian money-market rates advanced for a second day as concern the credit crisis has dragged the global economy into a recession overshadowed efforts by policy makers to revive lending. Hong Kong's three-month interbank lending rate climbed to the highest since Oct. 17, while Australian financing costs rose for the fifth time in six days.
A Japanese Trade Ministry report today showed that the nation's retail sales fell 0.4 percent in September, declining for the first time in 14 months. Singapore's central bank said today the island's economy faces ``further slippage'' after entering a recession last quarter.
Compal fell 6.9 percent to NT$19.60 after President Ray Chen said shipments in the fourth quarter will rise 5 percent, slower than a previous forecast of 15 percent.
Elpida, Creative
Elpida Memory Inc., Japan's biggest maker of computer-memory chips, tumbled 19 percent to 437 yen. It has plunged 89 percent this year, the biggest loss on the MSCI Asia-Pacific Information Technology Index, after it reported this month a first-half loss and analysts said the company may fail to pay back loans.
Creative Technology Ltd., a Singapore-based maker of accessories for Apple Inc.'s iPods, plunged 12 percent to S$2.64, a record low. The company posted a net loss of $32.2 million in the first quarter, its biggest in nine quarters. Skymark Airlines Inc., Japan's largest low-fare carrier, plunged 9.7 percent to 103 yen after predicting a net loss for the fiscal year.
China Life, the nation's biggest insurer, fell 7 percent to 17.83 yuan in Shanghai. Third-quarter profit retreated 70 percent as a plunge in Chinese stock markets crimped investment returns, the company said.
Bank of East Asia Ltd., Hong Kong's No. 3 bank by assets, fell 2.5 percent to HK$13.04, extending a five-day, 35 percent slump. The company will post a HK$2.2 billion ($284 million) loss on credit-link investments ravaged by turmoil in global markets, it said yesterday.
Investment Losses
Kowloon Development Co., a Hong Kong and Macau developer, plunged a record 50 percent to HK$1.30 after reporting HK$3.8 billion in losses from investing in equities and derivatives.
A decline in crude prices drove oil explorers lower. Santos Ltd., Australia's third-largest oil and gas explorer, lost 4.4 percent to A$11.23. Woodside Petroleum Ltd., the second-biggest, fell 2.9 percent to A$35.83. Inpex Holdings Inc., Japan's No. 1 explorer, declined 7.5 percent to 430,000 yen.
Crude oil for December delivery fell as much as 2.3 percent to $61.75 a barrel in New York, after declining 1.5 percent yesterday.
Queensland Gas jumped 80 percent to A$5.75. BG, the third- biggest U.K. oil and gas producer, agreed to pay A$5.2 billion ($3.1 billion) to buy the rest of the Brisbane-based company to gain full control over their planned liquefied natural gas venture in Australia.
HSBC, the world's No. 2 bank by market value, gained 8.3 percent to HK$81.25 in Hong Kong, accounting for a quarter of the benchmark Hang Seng's advance. The stock lost 25 percent in the previous two trading sessions.
Hong Kong's ``government has a set of measures ready and will act if needed,'' the city's financial secretary said yesterday, without saying if the government will buy shares. ``The stock market will continue to be volatile for a period of time.''
PetroChina Co., the nation's largest oil explorer, rallied 6.4 percent to HK$4.52, halting a four-day, 34 percent decline. JPMorgan Chase & Co. today raised its rating on the shares to ``overweight'' from ``underweight,'' citing the recent sell-off.
