Equity markets across the Asia-Pacific region slid on Monday as the global financial crisis deepened.
Reports that several European banks had either been nationalised or had to be rescued by peers overshadowed any comfort gained from the US government-sponsored rescue plan for the financial industry.
Worst hit were the Hong Kong and Mumbai indices – the Hang Seng shed 4.3 per cent to 17,880.68 and the Sensex lost 3.9 per cent to 12,595.75, having hit a 1½-year low in intraday trade.
The Hang Seng’s sub-index of mainland China companies listed in the territory was 6.6 per cent lower at 8,955.26, although the mainland markets were closed for public holidays. But BYD, one of China’s biggest makers of rechargeable batteries, jumped 41.7 per cent to close at HK$11.90 after a subsidiary of Warren Buffett’s Berkshire Hathaway investment company bought a 9.9 per cent stake in the company.
Ping An Insurance, mainland China’s second-biggest insurer, fell 10.4 per cent to HK$42.55 after saying it may need to increase provisions to cover losses from the sale of a stake in Fortis, the European bank, which has been rescued by the Belgian, Dutch and Luxembourg governments.
China Insurance International, however, rose 5 per cent to HK$14.58 on hopes that it might be able to buy Fortis’s 24.9 per cent stake in China’s sixth-largest insurer, Tai Ping Life. The insurer already owns just over half of Tai Ping.
Other mainland financial companies had a gloomy start to the week. China Construction Bank dropped 5.4 per cent to HK$4.95 and China Merchants Bank fell by 6.4 per cent to HK$18.72. HSBC, the world’s biggest bank by market value, fell by 1.4 per cent to HK$122.80.
Hong Kong’s large property sector was heavily hit after HSBC said it was raising its mortgage rate for new homebuyers by 50 basis points to 3.25 per cent, leading the Hang Seng’s property sub-index 6.1 per cent lower.
Moh Siong Sim at Citigroup said tighter funding conditions were starting to hit the financial hubs of Hong Kong and Singapore, caused by the liquidity shocks from the US.
Mr Sim added: “Interest rate hikes would hit the property market the most, and would also dampen domestic demand.”
Sino Land lost 7.8 per cent to HK$8.90 while Cheung Kong Holdings shed 7 per cent to HK$87. New World Development slumped 13 per cent to HK$8.23.
Singapore’s Straits Times Index lost 2.1 per cent to 2,361.64, with property stocks hit also by news that Grade A office rents in the central business district fell 1.4 per cent in the third quarter.
Suntec Real Estate Investment Trust fell 7.2 per cent to S$1.16. Keppel Land fell 6.4 per cent to S$2.76 while CapitaLand fell 4.1 per cent to S$3.26 after both stocks were downgraded to “underperform” from “neutral” by Credit Suisse.
Contributing to the 3.9 per cent fall on India’s Sensex were ICICI Bank, which lost 12.1 per cent to Rs493.30, and real estate developer Jaiprakash Associates, off 11.9 per cent to Rs106.70.
Tokyo’s Nikkei 225 average rose as much as 1.4 per cent but closed 1.3 per cent lower at 11,743.61 and the broader Topix index ended 1.7 per cent lower at 1,127.87.
As earnings season approached, investors braced themselves for downgrades. Akebono Brake closed 10.7 per cent lower at Y619 after slashing its estimate for net profit for the interim period ending Tuesday by 95 per cent to Y100m. Akebono, which is one of Toyota’s big suppliers, has struggled to cope with increasing materials costs and falling orders in the US for large cars.
Toyota Boshoku, also affiliated to the car producer, dropped 10.4 per cent to Y1,143. Vehicle makers in general had a bad day. Nissan Motor fell by 4.2 per cent to Y726, Suzuki Motor lost 4.6 per cent to Y1,928 and Toyota Motor dropped 3.2 per cent to Y4,590. Isuzu Motors fell by 8.3 per cent to Y298, following an analyst downgrade.
Financial stocks and resource groups were responsible for much of the losses on Australia’s S&P/ASX 200, which closed 2 per cent lower at 4,807.4.
Industry representatives welcomed the plan to try to boost competition in lending to home buyers but critics worried the amount was too small to make a significant difference in borrowing costs.
Coal prices near to six-month lows on worries about increased production in China and lower demand pushed Macarthur Coal down 5.5 per cent to A$10.80.
Weaker precious metal prices pulled Newcrest Mining down by 2.6 per cent to A$28.04. Aquarius Platinum fell by 5.3 per cent to A$6.82.
