bloomberg.com
Oct. 8 (Bloomberg) -- Asian stocks tumbled, driving the Nikkei 225 Stock Average to its biggest drop since October 1987, on concern the credit crisis will topple more banks and slowing growth will cut demand for the region's exports.
Indonesia halted stock trading after the benchmark index tumbled 10 percent, while Hong Kong's Hang Seng Index fell below 16,000 for the first time in two years. HSBC Holdings Plc dropped 2.6 percent as the International Monetary Fund said financial institutions may need $675 billion in fresh capital. Toyota Motor Corp. slumped 6.7 percent after Nikkei English News said profit may drop.
``The global growth story deteriorates by the day,' said Hans Kunnen, head of investment market research at Colonial First State Global Management, which manages about $128 billion. ``It is across-the-board fear that economic conditions will get seriously worse. It is capitulation.'
The MSCI Asia Pacific Index fell 5.7 percent to 93.11 as of 1:53 p.m. in Tokyo, bringing its decline this year to 40 percent. The measure is set for its lowest close since April 18, 2005. Financial stocks contributed the most to the index's drop.
Japan's Nikkei 225 Stock Average lost 7.1 percent to 9,433.89, leading declines in Asia. The Hang Seng slumped 5.5 percent, as Hong Kong's monetary authority cut interest rates to keep the credit crisis from spreading.
Australia's S&P/ASX 200 Index declined 4.8 percent as consumer confidence fell this month. Alumina Ltd. tumbled 10 percent after partner Alcoa Inc. reported a drop in earnings.
Shares tumbled across the Asia-Pacific region today, extending a global sell-off that's wiped out more than $5 trillion of market value in the past week.
Global Rout
Government and central bank efforts have done little to assuage concerns that the credit crisis will claim more institutions. Federal Reserve Chairman Ben S. Bernanke signaled yesterday he's ready to reduce interest rates, which only sparked a temporary rebound in U.S. markets.
The Standard & Poor's 500 Index plunged 5.7 percent, led by a rout in financial companies including Morgan Stanley. S&P futures added 0.2 percent today.
The U.K. is preparing a rescue package for British banks which includes cash injections and deposit guarantees, according to three people familiar with the plan. Royal Bank of Scotland Group Plc, the U.K.'s second-biggest bank, plummeted 39 percent yesterday as a downgrade in its credit rating sparked concerns of a run on the bank.
``The plans for propping up the markets aren't having an effect,' said Yoo Byung Ok, who oversees the equivalent of $3 billion at Mirae Asset Investments Co. in Seoul. ``The panic selling continues.'
Lower Growth Forecast
In a report on the financial system, the Washington-based IMF raised its estimate of losses tied to U.S. loans and securitized assets to $1.4 trillion from $1.3 trillion two weeks ago. The IMF cut its forecast for global growth next year to 3 percent from an April prediction of 3.7 percent, according to the draft of its latest World Economic Outlook.
``We are talking about a global recession in the offing,' said Jason Chong, who oversees $1.6 billion as chief investment officer at UOB-OSK Asset Management in Kuala Lumpur. ``There's really nowhere to hide as far as investing is concerned.'
HSBC, Europe's largest bank, dropped 2.6 percent to HK$117.40. National Australia Bank Ltd., the nation's largest bank, sank 6.7 percent to A$24.25. Mizuho Financial Group Inc., Japan's second-biggest bank by revenue, declined 5.1 percent to 371,000 yen.
Mitsubishi UFJ Financial Group Inc., bidding to buy a stake in Morgan Stanley, dropped 5.1 percent to 770 yen, after the New York-based bank's shares tumbled 25 percent on speculation the deal will fall through.
Slowing Sales
Toyota, the world's second-largest automaker, fell 6.7 percent to 3,460 yen. Operating profit may drop 40 percent to about 1.3 trillion yen ($12.8 billion), or 300 billion yen less than the company projected, the Nikkei newspaper said.
Honda Motor dropped 6.2 percent to 2,410 yen. Isuzu Motors Ltd., Japan's largest maker of light-duty trucks, plunged 11 percent to 199 yen.
UBS AG reduced its estimate for sales growth at Japanese companies to 2 percent from 5 percent and predicted recurring profit will decline 12.8 percent due to the global slowdown. Goldman, Sachs & Co. cut its estimate for Japan's growth next year to 0.5 percent from 1.3 percent.
Alumina, which owns a mining venture with Alcoa, tumbled 10 percent to A$2.66, the most since January 2008. Alcoa cut its forecast for aluminum demand growth by a quarter. Aluminum Corp. of China Ltd., the country's largest producer of the metal, plunged 14 percent to HK$3.65 in Hong Kong.
Commodities Slump
Resources stocks also fell as oil and metals prices declined on concern demand will slow. BHP Billiton Ltd., the world's largest mining company, declined 5.4 percent to A$29.99. Rio Tinto Group fell 5.7 percent to A$82.80. Cnooc Ltd., China's largest offshore oil explorer, fell 12 percent to HK$6.63.
Oil futures in New York fell as much as 1.2 percent in after-hours trading. Futures have declined 39 percent from their July 11 record. Copper on the London Metal Exchange fell 4.4 percent in Asian trading hours.
Hitachi Construction Machinery Co., the world's largest maker of giant excavators, slumped 9.6 percent to 1,642 yen, after the Nikkei newspaper said first-half pretax profit probably fell 6 percent on falling demand from Europe. Komatsu Ltd., the world's second-biggest maker of construction and mining machinery, dropped 6.3 percent to 1,201 yen.
Soho China Ltd., the biggest property developer in Beijing's central business district, dropped 7.9 percent to HK$2.22, after saying it will close hotels in the Chinese capital and in the southern province of Hainan after failing to win government approval to use the land for commercial purposes. |
