By Rosalind Mathieson and Mohammed Hadi
Asian shares tumbled Thursday, as U.S. economic woes and more downbeat news about a high-profile fund weighed on investor sentiment.
Tokyo's Nikkei 225 Index fell 3.3% to close at 12433.44, with exporters hit particularly hard given the yen's appreciation. Among Japanese exporters, Toyota Motor /zigman2/quotes/203803129/delayed JP:7203 +1.49% fell 3% and Sony /zigman2/quotes/201361720/delayed JP:6758 -0.67% shed 4%.
Financial stocks in Japan and the broader region came under pressure on news that Carlyle Capital expects its lenders to seize its assets, and cause the likely liquidation of the fund. "Although it has been working diligently with its lenders, the Company has not been able to reach a mutually beneficial agreement to stabilize its financing," the fund said in a statement. (See related article.)
Mizuho Financial /zigman2/quotes/204507985/delayed JP:8411 +0.87% Group lost 6.8% and Mitsubishi UFJ Financial Group declined 6.8%.
The Carlyle news also spurred some buying of bonds with lead June Japanese government bond futures surging to a two-and-a-half-year high of 140.14. The yield on the 10-year bonds fell below 1.3%, the lowest since July 2005.
Analysts said the gloss had scrubbed off the U.S. Federal Reserve's plan to inject liquidity and ease pressure on the credit markets, as the view prevailed that the move would do little to halt the U.S. economic downturn. "It looks like the honeymoon is already over," said Rabobank Global Financial Market's head of research for Asia, Jan Lambregts. "The Fed's liquidity measures do not address the underlying causes of turbulence in financial markets. Hence the wait for the next batch of negative headlines to wreak havoc."
The U.S. dollar dropped to a low of ¥100.03, its lowest level since November 1995, and remains close to that level at ¥100.09 while the euro earlier hit a record high of US$1.5587. Elsewhere, the U.S. dollar has wilted to a record low against the Singapore dollar of S$1.3817, and a 10-year low against Malaysia's ringgit of 3.1620 ringgit. (See related article.)
In Hong Kong, the Hang Seng Index fell 4.8% to 22301.64, up slightly from a low of 22251.24 just minutes before the session ended. Since the start of this year, the index has lost 20% of its value.
The exchange tracked sharp declines in China's mainland stock markets, which were dragged down by expectations of new restrictive monetary policies in the face of high inflation and a weakening in profitability among Chinese companies this year. The Shanghai Composite Index narrowed its losses, however, to end down 2.4% at 3971.26, its lowest level since July 19.
Chinese financial companies were among the major decliners in Hong Kong's index. China Life /zigman2/quotes/202359856/delayed HK:2628 -0.58% fell 6.3%, China Construction Bank /zigman2/quotes/208974133/delayed HK:939 -0.79% fell 6.1%, Bank of Communications /zigman2/quotes/203442771/delayed HK:3328 -0.54% dropped 6.1% and ICBC slid 5.5%. Property developers also plunged, with Sino Land falling 10% while New World Development lost 8.2% and MTR declined 5.9%.
China Railway Construction bucked the trend, rising 12% on its debut. The company, which raised $2.9 billion in its initial public offering, rose amid strong demand for Chinese infrastructure stocks.
On the mainland indexes, real-estate companies weakened with Poly Real Estate Group down 7.0%. Airlines fell on concerns about rising costs after crude oil futures hit another all-time high Wednesday. China Southern Airlines fell 10% and China Eastern Airlines dropped 8.3%. Retailers also fell sharply on fears of slowing demand, with Yinchuan Xinhua Department Store sliding 7.9%.
Seoul's Kospi Composite fell 2.6% to 1615.62. Shares of LG Display fell to a three-week low after Philips Electronics said it cut its stake in the South Korean maker of display panels to 13.2% from 19.9%, in line with the Dutch company's strategy to focus on other operations. The stock closed down 8.8% after falling as much as 9.2%.
In Australia, the benchmark S&P/ASX 200 ended 2.3% lower at 5135.9. The market weighed the prospect of another Australian interest-rate increase. Commonwealth Bank of Australia /zigman2/quotes/200638713/delayed AU:CBA +3.01% fell 5.5% while the National Australia Bank /zigman2/quotes/210431826/delayed AU:NAB +6.86% lost 3.8%.
Elsewhere, Singapore's Straits Times Index lost 3.85% to 2805.55, while Mumbai's Sensex was off 4.5% at 15401.47 in late trading.
Crude oil gave back some recent gains in Asian trading with the front-month Nymex contract 38 cents lower in electronic trade, at $109.54 per barrel, after having topped $110/barrel for the first time overnight. Spot gold was also lower, at $982.15 a troy ounce, down $1.25 from the New York close.