Asian stocks slump to three-month low

By Patrick Rial  |   2008-6-24  |     NEWSPAPER EDITION

ASIAN stocks slumped to the lowest in almost three months yesterday after a rebound in oil prices and renewed predictions of asset writedowns rekindled concerns global economic growth will slow.

Bridgestone Corp, the world's largest tiremaker by sales, dropped for a third day, according to Bloomberg News. Samsung Fire & Marine Insurance Co led financials lower as Citigroup Inc prepared to cut jobs and UBS AG forecast the US bank will write down more assets. Toyota Motor Corp tumbled to the lowest in a month as the dollar weakened and the US auto market deteriorated.

"People's fears about inflation are materializing as commodity prices rise," said Yang Jeung Won, chief investment officer in Seoul at Samsung Investment Trust Management Co, which oversees US$7.8 billion in equities. "Financials are going to teeter on shaky ground for a while to come."

The MSCI Asia Pacific Index lost 0.9 percent to 138.84 as of 5:30pm in Tokyo, headed for the lowest since April 1. Japan's Nikkei 225 Stock Average fell 0.6 percent to 13,857.47. Indexes declined throughout the region, except in Vietnam, New Zealand and Sri Lanka.

Shares in the Philippines dropped to a 20-month low after the central bank said it may have to tighten monetary policy to curb inflation. Pakistan's benchmark Karachi Stock Exchange 100 Index dropped 4.4 percent to the lowest since March 2007.

Fortescue Metals Group Ltd led commodities producers higher after Australia's government lifted its estimate for exports of raw materials.

More than US$8 trillion in global stock market value has been wiped out this year as a 42 percent jump in oil raises costs for consumers and businesses. Higher commodities prices are also hampering central bank efforts to keep interest rates low as financial institutions' access to credit dries up.

Oil rebounded for a second day, by 1.9 percent to US$137.14 a barrel in New York in recent trading.

Benchmarks in the US and Europe fell to the lowest in three months on June 20, dragged down by the gain in oil and after analysts predicted banks will post more credit-market losses. Futures for the Standard & Poor's 500 Index rose 0.3 percent yesterday.

Samsung Fire & Marine, South Korea's biggest non-life insurer by market value, dropped 2.7 percent to 216,000 won (US$207.57). Mitsubishi UFJ Financial Group Inc, Japan's second-biggest bank, lost 1.7 percent to 988 yen (US$9.16). T&D Holdings Inc, the nation's largest publicly traded life insurer, dropped 6.3 percent to 6,570 yen, the steepest slide since March 13.