Asian markets tumble on earnings fears

By Chua Kong Ho  |   2008-6-11  |     NEWSPAPER EDITION

ASIAN stocks fell the most in three months as widening credit-market losses and the prospect of higher borrowing costs fanned concern that earnings will decline.

Macquarie Group Ltd tumbled in Sydney and HSBC Holdings Plc dropped in Hong Kong after Lehman Brothers Holdings Inc reported a US$2.8 billion loss and Federal Reserve Chairman Ben S. Bernanke said policy makers will "strongly resist" inflation.

Industrial & Commercial Bank of China Ltd fell after the nation's central bank ordered lenders to set aside record reserves. Orient Overseas International Ltd led transport companies lower on concern rising oil prices will dent profits, Bloomberg News said.

"Markets are reacting to the fear factor of rising interest rates," said Robert Rountree, Singapore-based director of investment marketing at Prudential Asset Management, which oversees US$55 billion of assets in Asia. "It's going to take several years before the credit problems work themselves through the system."

The MSCI Asia Pacific Index lost 2.3 percent to 143.92 at 5:07pm in Tokyo, poised for its biggest drop since March 17 and the lowest since April 15. Japan's Nikkei 225 Stock Average retreated 1.1 percent to 14,023.17. Australia's S&P/ASX 200 Index lost 2.8 percent, its biggest decline since March 20. In the United States, Standard & Poor's 500 Index futures were down 0.9 percent recently.

Macquarie Group slumped 7.5 percent to A$51.80 (US$49.2), the most since March 13. Babcock & Brown, Australia's second-largest investment company, tumbled 6.6 percent to A$10.42.

The European Central Bank said on Monday large European banks face "dampened" profits and more asset writedowns, putting the financial system at more risk than six months ago.

HSBC, Europe's biggest bank, fell 2.7 percent to HK$127.80 in Hong Kong.

Bernanke, speaking late Monday in Boston, pledged to "strongly resist" any waning of public confidence in stable prices.