Asian Markets Fall With The Nikkei Down Over 3.5%

Financial and insurance stocks lead the way:

March 6 (Bloomberg) — Asian stocks fell, dragging the regional benchmark index to a fourth weekly decline, on renewed concern losses at financial institutions will mount as the global recession deepens.

HSBC Holdings Plc, Europe’s largest bank, sank 2.9 percent after CLSA Asia-Pacific Markets cut its share-price target and Citigroup Inc.’s stock fell below $1 for the first time. BHP Billiton Ltd. dropped 2.9 percent in Sydney after oil and metals prices retreated. Honda Motor Co., which gets more than half its sales from North America, lost 4.9 percent after the Japanese currency rose against the dollar.

“People haven’t yet understood the full depth of the financial crisis,” said Yoshinori Nagano, a senior strategist at Daiwa Asset Management Co., which oversees about $96 billion of assets. “Should regulators assess banks’ assets under stricter conditions, quite a few of these companies may be effectively insolvent.”

The MSCI Asia Pacific Index dropped 1 percent to 72.37 as of 7:31 p.m. in Tokyo, following a two-day, 1.8 percent gain. The gauge lost 4 percent this week, taking declines in the past year to 50 percent, as the global recession pummeled profits at companies including BHP and Honda.

Japan’s Nikkei 225 Stock Average slumped 3.5 percent to 7,173.10. Hong Kong’s Hang Seng Index lost 2.4 percent, while Australia’s S&P/ASX 200 Index fell 1.4 percent. All Asian markets declined except Taiwan, India and Sri Lanka.

Mounting Losses

Elpida Memory Inc., Japan’s biggest memory-chip maker, slumped 11 percent on concern a possible rescue plan for the company may be delayed. Bukwang Pharmaceutical Co., surged 7.8 percent in Seoul after receiving approval to sell a hepatitis drug. Manila Electric Co. climbed 13 percent on speculation its major shareholders are vying for control of the utility.

Futures on the Standard & Poor’s 500 Index dropped 0.5 percent. The U.S. gauge slid 4.3 percent yesterday to the lowest close since September 1996, led by financial companies. Shares of Citigroup, once the world’s biggest bank by value, tumbled to 97 cents before closing at $1.02, bringing this year’s decline to 85 percent.

“Citi below $1 shows we are still far from the exit of this U.S.-originated global financial crisis,” Kiyoshi Ishigane, a senior strategist at Tokyo-based Mitsubishi UFJ Asset Management Co., which oversees about $61 billion., said in an interview with Bloomberg Television.

Raising Funds

The global credit crisis sparked by a U.S. housing slump has caused almost $1.2 trillion of losses, prompting government bailouts of banks including Citigroup. Lloyds Banking Group Plc is close to an agreement with the U.K. government that would leave it state-controlled, the Financial Times reported.

HSBC sank 2.9 percent to HK$43.50. The company’s share- price target was cut to HK$28 from HK$41 at CLSA amid concerns some borrowers will fail to repay their loans, a report dated yesterday said.

The London-based lender announced plans on March 2 to raise 12.5 billion pounds ($17.7 billion) in the U.K.’s biggest rights offering. HSBC said it will eliminate 6,100 jobs and close U.S. consumer lending units after subprime losses cut profit.

Mitsubishi UFJ Financial Group Inc., Japan’s biggest bank, dropped 4.8 percent to 401 yen. Mizuho Financial Group Inc., Japan’s second-largest bank, slipped 4.9 percent to 176 yen.

Bank of Japan Deputy Governor Hirohide Yamaguchi said the central bank may need to expand its purchases of corporate debt to prevent a credit shortage as the recession deepens.

Worst Performers

A gauge of finance stocks on MSCI’s Asian index lost 2.2 percent today, the most of 10 industry groups. The finance gauge is also the worst performer this year.

“We’re still in a bad-debt cycle that hasn’t fully played out yet,” said Hugh Dive, who helps manage about $3 billion at Investors Mutual Ltd. in Sydney. “Banks are the blood of the economy, but no one could say the write-offs we’ve had so far are as bad as it gets.”

Stock declines in the past year have erased about $30 trillion from equity markets worldwide. The average valuation of companies on the MSCI Asia Pacific Index dropped by 7 percent in that time to 13 times reported profit.

BHP slipped 2.3 percent to A$27.65 in Sydney after a measure of six primary metals traded in London declined 1.6 percent for the first slump in three days. The company had its earnings estimates cut by Merrill Lynch & Co. because of declining metal prices.

Inpex Corp., Japan’s largest oil explorer, lost 3.7 percent to 620,000 yen in Tokyo after oil fell 3.9 percent to settle at $43.61 a barrel in New York yesterday. Cnooc Ltd., China’s largest offshore oil producer, slumped 3.2 percent to HK$6.08.

Rescue Package

Honda Motor, Japan’s second-largest carmaker, fell 4.9 percent to 2,150 yen in Tokyo after the Japanese currency strengthened to as high as 97.72 yesterday versus the dollar from a four-month low of 99.68 earlier. Toyota dipped 2.9 percent to 2,900 yen.

“The weaker yen provided support for Japanese equities, and that’s dissipated,” said Mitsubishi UFJ’s Ishigane.

Elpida tumbled 11 percent to 544 yen after the Nikkei newspaper said a possible rescue package involving Taiwan’s government may be arranged later than the company projected. Elpida had hoped to gain a package with Taiwan’s government by the end of March, the Nikkei reported today.

Bukwang, a South Korean drugmaker, jumped 7.8 percent to 17,300 won after saying it will sell Levovir, its hepatitis B medication, in the Philippines from June. Bukwang said it expects approval as early as this year to start sales of the drug in Malaysia and Thailand.

Manila Electric rose 13 percent to a record 126 pesos, rounding out a four-day, 41 percent rally. San Miguel Corp. Vice Chairman Ramon Ang said yesterday his company hasn’t added to the stake it agreed to buy last year. San Miguel said it would purchase 27 percent of the utility in October and took four seats on its board in January.

“It’s still the speculation, that’s what’s driving share prices right now,” said Paul Jeffrey Lu, an analyst at Citiseconline.com in Manila. “It’s exceeded my fair valuation for the stock.”