Asian Stocks Decline on Slowing Global Growth, Banks (Bloomberg) (11-02-2008)

Feb. 11 (Bloomberg) -- Asian stock markets declined as trading resumed after the Lunar New Year celebrations and banks were hurt following the inflation warning by the Australian Central Bank; the Group of Seven policy makers said fallout from the U.S. housing slump may cause global growth to slow down further.

The MSCI Asia-Pacific excluding Japan Index lost 2.6 percent to 456.58 as of 3:49 p.m. in Hong Kong. South Korea's Kospi dropped 3.3 percent. India's Sensitive Index slumped 4.8 percent, Asia's biggest decline.

Bank of Communications Ltd. led Chinese financial companies lower after Goldman, Sachs & Co. cut their share-price targets. Hong Kong and Singapore fell following Lunar New Year holidays. Japan, China and Taiwan are shut today.

Officials of G-7(U.S., the U.K., Canada, Italy, France, Germany and Japan), ended a weekend meeting in Tokyo saying “downside risks persist,” including the U.S. housing slump and tighter credit conditions. “Growth is expected to slow somewhat in the short term” in “all our economies,” they said in a statement.

Kookmin, South Korea's largest bank plunged by 6.5 percent to 58,000 won, its steepest decline since June 11, 2004, while HSBC Holdings Plc, Europe's biggest bank by market value, slipped 2.6 percent to HK$111 in Hong Kong.

Macquarie Fortress Investments Ltd., an asset manager run by Australia's biggest investment bank, plunged 56 percent to 11 Australian cents after it was forced to sell U.S. assets at a loss to repay debt. Its parent, Macquarie Group Ltd., lost 3.9 percent to A$60.08.

Commonwealth Bank, Australia's No. 2, lost 2.8 percent to A$48.75,  Westpac Banking Corp., Australia's fourth-biggest bank, slid 2.7 percent to A$24.30. Australia and New Zealand Banking Group Ltd., the third-biggest, dropped 3.1 percent to A$24.80.

The Reserve Bank of Australia said it will probably need to increase rates further to cool “uncomfortably high” inflation. The central bank raised rates last week to an 11-year high of 7 percent. Higher borrowing costs may damp demand for loans and mortgages.

Bank of Communications, minority owned by HSBC Holdings Plc, lost 3.8 percent to HK$8.78 in Hong Kong. Bank of China Ltd., the third-largest Chinese bank, slipped 2.5 percent to HK$3.08. China Construction Bank Corp., the second-biggest, fell 2.5 percent to HK$5.53.

Goldman cut its 12-month share-price estimate for Chinese banks by as much as 31 percent. The reductions came amid concerns of slowing profit growth owing to rising interest rates, analysts at the brokerage including Ning Ma said in a note today.

Reliance Power lost 11 percent to 401.6 rupees, after earlier slumping as much as 14 percent. The unit of Reliance Energy Ltd., India's second-biggest utility by market value, sold its stock at 450 rupees in an initial offering. Investors ordered shares valued at as much as $189 billion.

Reliance Energy plunged 5.4 percent to 1,858 rupees.

Source: Bloomberg