Asian stocks slumped for a third week amid mounting concern the financial crisis is “reigniting” as the deepening global recession cut into corporate profits.
HSBC Holdings PLC, Europe’s largest bank, lost 11 percent for the week after the UK and US governments were forced to provide new bailouts for banks and New York University professor Nouriel Roubini said credit losses could surpass US$3 trillion. Sony Corp plunged 13 percent after forecasting a record loss, while Samsung Electronics Co, the world’s largest liquid-crystal display TV maker, dropped 5.8 percent after posting its first quarterly loss.
The MSCI Asia Pacific Index slid 5.2 percent last week to 80.32, the lowest level since Dec. 5. The benchmark measure fell for a third consecutive week, the first time since October it has done so.
Financial companies posted the biggest declines on the benchmark index, which slumped by a record 43 percent last year as the credit crunch tipped the world’s largest economies into recession, forcing companies to cut jobs amid slumping profits.
Japan’s Nikkei 225 Stock Average lost 5.9 percent in the week as the yen’s climb to the highest since 1995 against the dollar added to exporters’ woes. Most benchmark indexes retreated across the region, except in China, where the central government unveiled additional measures to support the economy.
Concerns banks will be nationalized weighed on shares of lenders throughout the world. The UK government moved to raise its stake in Royal Bank of Scotland Group PLC, while Bank of America Corp received a bailout and was forced to slash its dividend to US$0.01.
HSBC tumbled 11 percent to HK$57.45 (US$7.40). Morgan Stanley and Goldman Sachs Group Inc have predicted the bank, which gets about a fifth of its revenue in North America, may have to raise additional capital.
US financial losses from the credit crisis may reach US$3.6 trillion, suggesting the banking system is “effectively insolvent,” Roubini, who predicted last year’s economic crisis, said on Tuesday. Institutions worldwide have so far reported writedowns and losses of more than US$1 trillion.
Mizuho Financial Group Inc, Japan’s second-largest listed lender, dropped 15 percent to ¥212 (US$2.39). National Australia Bank Ltd., the country’s biggest by assets, slumped 12 percent to A$16.94.
Sony, the maker of PlayStation3 game consoles, lost 13 percent to ¥1,802. The company said it expects a record ¥260 billion operating loss for the year ending in March amid falling demand, the strong yen and costs to restructure its business.
“Sony’s loss forecast was an order of magnitude greater than what some analysts had estimated,” Soichiro Monji, chief strategist at Daiwa SB Investments Ltd, which manages the equivalent of US$53 billion, said in an interview with Bloomberg Television. “The bad news about earnings and economies is accumulating.”
China last week reported its slowest rate of growth in seven years as the economy grew at an annualized 6.8 percent pace in the fourth quarter. South Korea’s central bank also said the country’s economy shrank a 5.6 percent last quarter, the biggest decline since the Asian financial crisis.
Samsung lost 5.8 percent to 442,000 won (US$323) as it reported a fourth-quarter net loss amid slumping demand for its computer chips, televisions and mobile-phone handsets.
The TAIEX closed up 0.13 percent to 4,247,97 on Wednesday before the Lunar New Year holiday. Markets will reopen on Feb. 2.
Other regional markets:
KUALA LUMPUR: Down 0.7 percent. The Kuala Lumpur Composite Index fell 6.33 points to close at 872.69 points with a turnover of 277.13 million shares worth 388.36 million ringgit (US$107.43 million).
JAKARTA: Down 0.9 percent. The Jakarta Composite Index dropped 11.74 points to 1,315.59 in thin volume.
MANILA: Down 0.3 percent. The composite index lost 6.18 points to 1,857.34, while the all shares index shed 0.5 percent to 1,202.41.
WELLINGTON: Down 1.07 percent. The NZX-50 index fell 29.33 points to close at 2,705.09. Turnover was NZ$92.4 million (US$48.8 million).
MUMBAI: Down 1.58 percent. The benchmark 30-share SENSEX index was 139.49 points
‘NO SURRENDER’: A blockade or outlying island seizure would be an act of war, and China’s drills last month have emboldened Taipei in its response plans, an official said The Republic of China Army Command Headquarters has agreed to purchase 5,000 Kestrel close-range anti-armor missiles worth NT$400 million (US$12.63 million) from the Chungshan Institute of Science and Technology, according to the military’s latest arms purchase bid notice. The army asked the institute to complete the order within 13 months, a military source said on condition of anonymity. Kestrel missiles are designed to penetrate armored vehicles and are used in anti-surface warfare, as they feature optical sights and night vision, and can be operated in all weather conditions. The missile has a 400m range, or a 150m range when used for breaching brick
IF THE CHIPS ARE DOWN: The US secretary of state warned that a disruption to the supply of Taiwanese semiconductors would play havoc with the global economy If Taiwan were attacked, the global economy would face devastation, as that is where most of the world’s semiconductors are produced, US Secretary of State Antony Blinken said on Sunday. In an interview that aired on the 60 Minutes television program, Blinken was asked whether instability across the Taiwan Strait would be felt around the world. Blinken said that China has been increasingly aggressive against Taiwan, posing a threat to peace and stability in the region, while economically the world would feel the effects of such aggression. Blinken was interviewed for the program after meeting with Chinese Minister of Foreign Affairs Wang Yi
‘ABSURD’: UN Resolution 2758 expelled the Chiang Kai-Shek government without mentioning Taipei, something the Chinese minister did not acknowledge, Taipei said Taiwan yesterday criticized Chinese Minister of Foreign Affairs Wang Yi (王毅) for “intentionally misinterpreting” a 1971 UN resolution to misrepresent Taiwan’s status to the global community. In his address on Saturday to the UN General Assembly, Wang cited Resolution 2758 as a basis for Beijing’s claim that Taiwan is part of China. He said that Beijing considers Taiwan an “inseparable part of China’s territory since ancient times.” “Only when China is completely reunified can there be enduring peace across the Taiwan Strait... Any move to obstruct China’s reunification is bound to be crushed by the wheels of history,” Wang said. General Assembly Resolution 2758
The UK is determined to work with its allies to ensure that Taiwan can defend itself, British Prime Minister Liz Truss said on Sunday, a pledge that drew expressions of gratitude from Taipei. “What I’ve been clear about is that all of our allies need to make sure Taiwan is able to defend itself, and that is very, very important,” Truss said in a CNN interview, when asked whether the UK was willing to match the US’ pledge last week to defend Taiwan militarily in the event of an attack by China. Truss said her government was working with its G7 allies,