`Cash is king' for Asian funds after widespread losses

Asian managers are selling stocks and moving to the highest levels of cash in years to limit losses as equity markets tumble.

A JF Asset Management Taiwan fund, run by Charles Chen, has moved 15 percent of its assets into cash, the highest level in three years. The asset-management unit of the Philippines' biggest bank is holding 20 percent, the most in about a year, and Shinhan BNP Paribas Investment Trust Management Co in South Korea is also increasing its cash holdings, money managers at the companies said.

The MSCI World Index has slumped 11 percent this year as losses and writedowns tied to investments in US subprime mortgages rose to about US$190 billion.

"Cash is king now, and investors will continue to reduce their stock holdings," said JF's Chen, who helps manage US$3.7 billion in Taipei. "Confidence will need some time to recover. We are trying to raise our cash level."

JPMorgan Chase & Co yesterday agreed to buy Bear Stearns Cos for about US$240 million, about a 10th of what Wall Street's fifth-largest securities firm was valued at last week. JPMorgan came to Bear Stearns' rescue last week with a cash infusion engineered by the US Federal Reserve as clients pulled out US$17 billion of assets in two days and creditors stopped renewing loans.

The Fed cut the rate on direct loans to banks and became lender of last resort to the biggest dealers in US government bonds. All of Asia's stock indexes fell.

"It is a very bloody day," said Patrick Manaloto, at BPI Asset Management Inc.