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Asian Stocks Tumble as Economic Concerns Widen; Yen Advances 

By Kyung Bok Cho and Ian Sayson

Oct. 27 (Bloomberg) -- Asian stocksplunged for a fourth day on concern economic stimulus measures will fail to stop a global slowdown that's forcing more countries to seek International Monetary Fund help.

Hong Kong's Hang Seng Index sank as much as 15 percent as money market rates rose. Trading halts were triggered in the Philippines and Thailand after the country's benchmark gauges lost 10 percent. Japan's Nikkei 225 Stock Average fell to a 26- year low, paced by Toyota Motor Corp., after a Group of Seven statement about the yen's ``excessive volatility'' failed to stop the currency gaining for a fifth day. South Korea cut rates at an emergency meeting today to stem the slump in its markets.

``This is a bloodbath,'' said Jonathan Ravelas, chief market strategist at Banco de Oro Unibank Inc., which has more than $6 billion in trust assets under management. ``The market continues to focus on the negative economic effects of the financial crisis instead of the actions taken by governments and central banks to restore confidence.''

The MSCI Asia Pacific Index fell 6.1 percent to 75.51 as of 7:35 p.m. in Tokyo, extending a three-day, 13 percent decline. The gauge has lost 29 percent this month and now trades at 1 times book value, less than the S&P 500 at 1.7 times book value and the Dow Jones Stoxx 600 Index at 1.2 times.

Hong Kong's Hang Seng tumbled as much as 15 percent, the biggest decline since June 5, 1989, when the Chinese government used military force to clear demonstrators in Beijing's Tiananmen Square. Aluminum Corp of China Ltd.led declines after profit fell.

Funding Costs

Asian money-market rates rose speculation the global credit crisis is worsening even after governments and central banks pledged to spend trillions of dollars worldwide to revive lending.

Hong Kong's three-month interbank lending rate, or Hibor, climbed 0.45 percentage point to 3.74 percent, the most since Sept. 18. It's ``understandable'' that the city's banks are tightening lending, Monetary Authority Chief Executive Joseph Yam said today. Japan's three-month rate for yen loans advanced to the highest since March 1998.

The Nikkei 225 lost 6.4 percent to 7,162.90, its lowest level since October 1982. Mitsubishi UFJ Financial Group Inc. plummeted after the Nikkei newspaper said the bank will need to raise funds.

The yen rose to 92.80 per dollar, from 94.32 in New York on Oct. 24. It touched a 13-year high of 90.93 on Oct. 24. Japan's Prime Minister Taro Aso said he'd draft measures to help counter the financial crisis.

``In this kind of market that's moving without sensible reasons, only God knows what's going to happen tomorrow,'' said Yoshinori Nagano, a Tokyo-based senior strategist at Daiwa Asset Management Co., which manages the equivalent of $96 billion. ``That's why people are so scared.''

IMF Aid

The International Monetary Fund said yesterday it will lend Ukraine $16.5 billion and give Hungary ``a substantial financing package.'' The bank has agreed to lend Iceland $2 billion, while Belarus and Pakistan may also get emergency loans.

Concern that the credit market turmoil has spread to Asian emerging markets drove the Philippine benchmark index down 12 percent, the biggest decline since 1987. Trading was earlier suspended for 15 minutes. Trading was also halted in Thailand after the SET index declined 10 percent. New Zealand, Singapore and Malaysia were closed for holidays today.

South Korea's Kospi Index was the only Asian stock market to gain, adding 0.8 percent in the last minutes of trading. The central bank slashed interest rates by a record 75 basis points at an emergency meeting to bolster markets as the nation faces its biggest crisis since requiring an IMF bailout 10 years ago.

`Complete Panic'

The rate cut ``won't make much difference right now,'' Steve Hanke, professor of applied economics at Johns Hopkins University, said in a Bloomberg Television interview. ``They're really in the middle of a complete panic and probably part of the panic has been created internally by making a kind of ad hoc policy. They don't seem to really have a coherent game plan.''

Traders also increased bets that U.S. Federal Reserve policy makers will cut their target for overnight loans between banks in half to 0.75 percent.

More than $11 trillion has been erased from the market value of equities so far this month, accounting for almost one-third of the total value wiped off stocks this year. MSCI's index of developed and emerging stock markets plunged 47 percent in 2008, headed for its worst year on record, as credit-related losses topped $660 billion.

In Hong Kong, Aluminum Corp, known as Chalco, retreated 13 percent to HK$2.17. The company said yesterday that quarterly profit slumped 93 percent as slowing growth damped demand.

Banks Decline

Industrial & Commercial Bank of China Ltd., the world's largest by market value, slid 11 percent to HK$2.80, a record low. The company said on Oct. 24 that third-quarter profit rose 26 percent, the smallest gain since the bank went public two years ago.

HSBC Holdings Plc, the world's second-biggest bank by value, tumbled 15 percent to HK$75, the most since October 1997. The stock has tumbled 25 percent since Morgan Stanley cut its price estimate for the stock by the same amount on Oct. 24, citing earning concerns.

Citic Pacific Ltd., which holds a stake in Cathay Pacific Airways Ltd., slipped 28 percent to HK$3.66, a record low. About 40 of the company's investors are seeking compensation for stock losses resulting from the company's failed bets on the Australian dollar, the South China Morning Post reported.

Kawasaki Kisen Kaisha Ltd., Japan's third-largest shipping line, lost 6.9 percent to 322 yen, while Mitsui O.S.K., operator of the nation's largest fleet of iron-ore ships, slid 6.9 percent to 379 yen. The companies cut their full-year profit forecasts as shipping rates drop.

Fundraising

Mitsubishi UFJ fell 15 percent to 583 yen and Mizuho Financial Group Inc. lost 15 percent to 230,000 yen. Both stocks dropped by the most on record.Sumitomo Mitsui Financial Group Inc., Japan's third-largest bank, slid 11 percent to 385,000 yen.

Mitsubishi UFJ said after the market closed that it will sell as much as 990 million yen ($10.7 billion) of stock to replenish its capital. The Nikkei newspaper said yesterday the lender may raise as much as 1 trillion yen to improve its finances.

Mizuho Financial and Sumitomo Mitsui may also raise capital, broadcaster NHK reported. The two banks said in separate statements today that nothing has been decided.

Taiwan's Taiex Index tumbled 4.7 percent, led by Hon Hai Precision Industry Co. after regulators widened daily stock trading limits to 7 percent from 3.5 percent.

Hon Hai, the world's largest contract electronics manufacturer, sank 6.9 percent to NT$70.40 in Taipei, capping a nine-day, 28 percent retreat. Cathay Financial Holding Co., Taiwan's largest financial-services company, dropped 6.9 percent to NT$30.20.

To contact the reporter for this story: Kyung Bok Cho in Seoul atkcho7@bloomberg.net; Ian C. Sayson in Manila atisayson@bloomberg.net

Last Updated: October 27, 2008 06:42 EDT