Uncertainty over US President Barack Obama’s bank revamp plans and fears of policy tightening by Beijing spooked risk-averse investors in Asian trade yesterday, as financial stocks continued to slide.
World market sentiment has soured since Obama unveiled plans on Thursday for a tough banking reform that would limit “excessive” risk-taking blamed for the economic crisis, a move that would affect the scope of financial institutions.
Fears Beijing will curb credit as it tries to rein in its economy have also eroded risk appetite, while its calls for banks to raise funds to meet regulatory requirements have prompted concerns of share value dilution.
In Tokyo the Nikkei was down 0.74 percent, or 77.86 points to 10,512.69 as a stronger yen weighed on exporters. In Seoul the KOSPI shed 0.84 percent, or 14.15 points, to 1,670.20.
Hong Kong shares were down 0.89 percent by the break.
“It seems that the Obama administration is trying to fight the decline in [its voter] support by addressing popular criticism against the financial sector,” Mizuho Securities analyst Yukio Takahashi told Dow Jones Newswires. “This issue could continue to weigh on Wall Street.”
The region saw broad falls following a 2.09 percent slump on the Dow Jones index on Friday, its biggest weekly drop since last February.
The TAIEX closed down 54.32 points, or 0.69 percent, at 7,872.99.
“Wall Street will continue to dictate the local trading amid weak sentiment toward financial firms,” Grand Cathay Securities (大華證券) analyst Mars Hsu said.
Sydney also shed 0.69 percent, with the S&P/ASX200 down 32.7 points at 4,717.9. Financials were hardest hit, with Westpac down 1.8 percent at A$24.92 (US$22.55) and ANZ 1.6 percent lower at A$22.29.
Singapore fell 0.40 percent.
Shanghai dropped 0.41 percent with banks leading the losses after Bank of China (中國銀行) announced aggressive plans over the weekend to issue new shares and a 40 billion yuan (US$5.9 billion ) convertible bond sale. The lender’s Shanghai-listed shares saw volatile trade but recovered early losses to rise 0.24 percent in early afternoon trade.
Chinese banks need to raise funds to meet regulatory requirements for capital after a lending spree last year in response to government calls to support the country’s massive economic stimulus efforts.
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