Asian stocks declined as bank funding costs increased and Suncorp-Metway Ltd. increased its forecast for bad debts, fueling concern that the credit crisis is hurting profits at financial companies.
Suncorp, a banking and insurance company, dropped 3.3% in Sydney as it prepares for the potential collapse of asset manager Babcock & Brown Ltd. Standard Chartered Plc fell 4.6% in Hong Kong after the Financial Times reported the bank plans to raise $3 billion in a rights offer. Newcrest Mining Ltd., Australia’s biggest gold producer, jumped 12% after bullion surged Nov. 21.
Most Asian markets fell today, with Japan shut for a holiday. The MSCI Asia Pacific excluding Japan Index declined 1.1% to 205.90 as of 10:11 a.m. in Hong Kong. Financial stocks contributed the most to the drop. The gauge is down 61% this year, leaving it at 8.6 times estimated profit, about half its valuation at the start of 2008.
Australia’s S&P/ASX 200 Index fell 0.8% to 3,388.70. South Korea’s Kospi Index lost 2.4%.
US stocks rallied Nov. 21, pushing the S&P 500 up 6.3%, after President-elect Barack Obama picked New York Federal Reserve Bank chief Timothy Geithner to head the Treasury. Concern Citigroup Inc. may need a government takeover sent bank stocks in the S&P 500 down 24% last week, the steepest slide in at least 19 years.
Bad debts
Citigroup, whose shares lost 60% last week, and US regulators are in talks about a plan to limit the bank’s potential losses from toxic assets, people familiar with the matter said. December futures on the Standard & Poor’s 500 Index gained 1.2% as Democratic lawmakers pledged to agree on an economic stimulus package by January.
''The market was calling for either a breakup or some kind of resolution” for Citigroup, said Jack Ablin, who helps manage about $60 billion as chief investment officer of Harris Private Bank in Chicago. “This is going to be the main focus of market activity.”
The rate Australian banks charge each other for three-month loans rose 3.8 basis points to 4.47% in Sydney. The cost of borrowing in dollars for three months in London gained for the first time in four days on Nov. 21 as concern about credit losses and writedowns increased.
Suncorp fell 3.8% to $6.65 after today saying bad debts may increase to as much as 0.4% of total loans in the 12 months ended June 30 next year, partly consisting of unspecified loans to Babcock.
